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.

Guest blog: Kids and car safety

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By Sydney Greenberger, NCL Summer Intern

On June 20, the first day of Summer 2024, 1,086 baby onesies were placed in a display across from the U.S. Department of Transportation headquarters in Washington, DC, representing the number of young lives lost to hot cars since 1990 in the United States. Kids and Car Safety predicts that over 7,500 more children have survived being left in hot cars, with various injuries. Already in 2024, three young children have lost their lives; the situation is exacerbated because the National Highway Traffic Safety Administration (NHTSA) has failed to issue a regulation requiring technology to be placed in new cars to stop hot car deaths despite a mandate from Congress to do so.

In 2022, Congress directed the NHSTA to issue a federal safety standard requiring new vehicles to be equipped with technology to prevent hot car deaths by November 2023. The NHTSA has delayed action until November 2024. The technology is there, and it isn’t expensive, but the NHTSA has priorities other than protecting the lives of innocent children and companion animals at risk of being forgotten in hot cars this summer.

A common misconception among parents in the U.S. is ‘this would never happen to my family; how could you ever leave your child in a car?’ However, history proves that these tragedies can happen to anyone. More than half of these accidents occur because a parent unknowingly left their child in their vehicle. It happens to parents who are absent-minded. But it also happens to the most attentive parents. Parents who are well-educated and well-off. Over the past decade, it has happened to a dentist, a social worker, a police officer, a nurse, an assistant principal, a pediatrician, and many more. Preventable hot car tragedies can happen to anyone.

On average, 38 American children die yearly from these tragedies. 88% of these victims are under three years of age. 43% of children who were unknowingly left in cars were supposed to be dropped off at their daycare. Rear-facing car seats look the same to parents whether there is a child in them or not, and if a child is asleep, it can be easy to forget they are there.

Once a child has been left in a hot vehicle, saving them from these preventable tragedies is a race against the clock. A child’s body temperature rises 3-5 times faster than an adult’s. Cracking the windows and parking in the shade do little to slow the heating process or decrease the maximum temperatures in a vehicle, and temperatures in cars rise fastest within the first 10 minutes of being parked. Hot car deaths have occurred on sunny days with temperatures as low as 60 degrees. Heatstroke starts when the body reaches a core temperature of 104 degrees, and death can occur at just 107 degrees. By the time parents realize what has happened, it is almost always too late.

Technology could have prevented most of these accidents from occurring. Most car manufacturers support rear-seat reminder systems, which are audio and visual systems that remind drivers to check the backseat after shutting off the engine and exiting the vehicle. The hot car provision passed by Congress calls for these audio and visual reminders, but advocates believe that occupant detection systems are needed to prevent hot car deaths and injuries. Occupant detection systems use motion, radar, lidar, and carbon dioxide to detect a living being inside a vehicle. These systems can distinguish between living things and inanimate objects in the back seat. The system cannot be overridden or disabled, and minimizes false alarms.

Rather than require occupant detection and alert technology that costs less than $20 per vehicle, the NHTSA has decided that a “Stop. Look. Lock.” campaign is more effective than inexpensive life-saving technology.

Until the NHTSA passes these required regulations to ensure child safety in hot cars this summer, it’s up to parents to ensure the safety of their children and pets. If you see a child left unattended in a vehicle, immediately call 911. Teach children that vehicles are not a play area, and store car keys out of reach. Have a plan that your childcare provider will call you if your child fails to show up for school. Create a “look before leaving” routine whenever you get out of the car. Many parents leave their briefcase or ID badge in the back seat, so they must check before going into the office. Others always keep a large stuffed animal in the car seat. If their child is in the car, the stuffed animal moves to the front seat, reminding parents that the child is in the back.

The most effective way to prevent hot car deaths of children and pets is through the life-saving technology that the NHTSA has failed to regulate and require. The NHTSA has left it solely to parents to ensure child and animal car safety. We should all be calling our members of Congress and urging government officials to prioritize and regulate the safety of children and pets.

Sources

Safety recommendations from noheatstroke.org

Kids and Car Safety

Kids and Car Safety Occupant Detection vs. End of Trip Reminder

From the NHTSA

32304B. Child Safety

Advocates for Highway and Auto Safety

Press Release

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NCL staff attends consumer protection brownbag

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By Sally Greenberg, Chief Executive Officer, NCL

On June 25, 2024, the National Consumers League (NCL) joined the Consumer Protection Brownbag event, moderated by Adam Teitelbaum, the Director of the Office of Consumer Protection at the DC Attorney General’s Office.

I shared the history and mission of NCL and discussed our more recent successes, including NCL’s advocacy role for workers in DC receiving minimum wage through the “One Fair Wage” initiative and the Federal Aviation Administration Reauthorization Act of 2024, which now includes automatic refunds for flight cancellations and excessive delays and the elimination of fees for parents to sit with their children. We also discussed anti-trust concerns with the Ticketmaster-Live Nation merger and the ongoing lawsuit involving the DOJ and DC OAG. Moreover, I spoke about our case against Starbucks for false claims regarding ethically sourced products. Finally, I covered a range of consumer protection efforts, from fraud prevention and unit pricing enforcement to proposed alcohol labeling reforms.

Erin Witte, Director of Consumer Protection at the Consumer Federation of America (CFA), spoke about the mission of CFA and her personal journey from criminal lawyer to consumer protections advocate. She outlined CFA’s current focus areas, including tackling junk fees, combating forced arbitration clauses that limit consumers’ legal recourse, and advocating for product safety, food and alcohol regulations, investor protection, and insurance reforms. She also discussed the link between credit scores and car insurance, and how this association is one of the primary drivers of rising insurance costs. Witte highlighted CFA’s collaboration with regulatory agencies to address these pressing consumer issues.

Witte, Teitelbaum, and I responded to questions during the question and answer session about the obstacles faced by attorneys and advocates pursuing consumer protections and how the possible changes in administrative deference could affect the future of consumer protection.

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Advocates call on Biden Administration to act on airline passenger protection mandates

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May 28, 2024

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

WASHINGTON, DC – With the summer travel season under way, consumer and passenger rights advocates today called on the Biden Administration to act expeditiously on consumer protection rulemakings and other actions mandated by the recently enacted Federal Aviation Administration (FAA) reauthorization language. In a letter to President Biden and Secretary Buttigieg, the groups urged the Administration to prioritize the following actions:

  • Nominating a pro-passenger Assistant Secretary of Aviation Consumer Protection;
  • Ensuring that the FAA establishes minimum seat size standards for air carriers;
  • Improving reporting of the causes of flight delays to the U.S. Department of Transportation (DOT);
  • Ensuring that customer service channels are staffed by humans; and
  • Completing an independent non-partisan study of airline industry consolidation.

“Beginning the hard work of making airline travel less frustrating for passengers should not wait for the next election,” said John Breyault, Vice President of Public Policy, Telecommunications, and Fraud at the National Consumers League (NCL), which organized the letter. “Congress gave the Administration an aggressive timeline for implementing the new law, and we do not want these important new protections to be slow walked.”

“Both parties and both Houses of Congress put forth key protections for consumer advocacy, competition, and safety,” said William J. McGee, Senior Fellow for Aviation & Travel at American Economic Liberties Project. “In the past we’ve seen legislation that was not fully acted upon, and we urge the Biden Administration to swiftly and decisively implement these new laws.”

“The message from Congress is clear: the Administration must promptly take concrete steps to improve air travel for Americans,” said Erin Witte, Director of Consumer Protection for Consumer Federation of America. “Rather than waiting or delaying, the Administration should push forward and prioritize the implementation of the Reauthorization Act.”

“Congress has done its job and now it’s time for the Administration to do theirs,” said Teresa Murray, Consumer Watchdog Director at U.S. PIRG. “As we saw during COVID, our economy and our quality of life relies a lot on safe, reliable air travel. We’re eager to see these changes enacted quickly in hopes that air travel will become pleasant again.”

“Since 2007, FlyersRights as the largest airline passenger organization has been advocating for many of the provisions in this legislation,” said Paul Hudson, President of FlyersRights.org. “But while Congress previously required the FAA to enact numerous measures such as minimum seat size in 2018, FAA and DOT have often failed to act on Congressional mandates. This time must be different!”

The letter was signed by nine consumer and passenger advocacy organizations, including the American Economic Liberties Project, Consumer Action, Consumer Federation of America, Consumer Reports, FlyersRights.org, National Consumers League, Public Citizen, Travelers United, and U.S. Public Interest Research Group.

To read the full letter, click 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 nclnet.org.

NCL statement on DOJ suit against Live Nation Entertainment

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May 23, 2024

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

WASHINGTON, DC – The National Consumers League (NCL) today hailed the Department of Justice’s (DOJ) reported decision to file an antitrust suit against Live Nation Entertainment, the parent company of Ticketmaster.  

The following statement is attributable to John Breyault, National Consumers League Vice President of Public Policy, Telecommunications & Fraud: 

“In 2010, the Department of Justice decided that allowing Ticketmaster to swallow up its largest competitor could be a net positive for live event fans. The last fourteen years have proven beyond any reasonable doubt that the DOJ’s bet was dead wrong. Today’s action begins the long-overdue process of correcting that error and upholding the law. We will be closely monitoring this case to ensure that the result this time is a fairer and more competitive industry for fans and all the stakeholders in the success of live events.” 

Since 2010, NCL has pursued policies that promote stronger consumer protection policies that benefit live event fans at the local, state, and federal levels. In 2016, NCL was one of the leading advocates for the BOTS Act, federal legislation that outlawed the use of ticket buying “bot” software. Since 2019, the average cost of a concert ticket to the top tours in North America increased from $87 to $104, due in large part to added fees, dynamic pricing, and other factors. NCL’s advocacy has contributed to landmark fan protection legislation in eight states. We continue to speak out in support of pro-consumer ticketing bills like the federal TICKET Act (H.R. 3950), which recently cleared the U.S. House of Representatives on a bipartisan 388-24 vote. 

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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 urges Congressional action at hearing on Zelle and fraud

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May 21, 2024

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

WASHINGTON, D.C. – The National Consumers League (NCL) today urged Congress to move swiftly to enact new laws that will put a significant dent in the billions of dollars in fraud that occur annually via peer-to-peer (P2P) payment apps. In testimony before the Senate’s Permanent Subcommittee on Investigations, NCL Vice President of Public Policy, Telecommunications, and Fraud John Breyault described fraud as reaching “crisis levels,” with estimates of annual losses to fraud exceeding $137 billion.  

“The same factors that have made P2P services popular with consumers – access via mobile device and near-instantaneous payment – have also attracted a tsunami of scammers,” said NCL Vice President John Breyault. “Unfortunately for consumers, the P2P services have failed to keep pace with this threat.” 

Breyault’s testimony focused on the unique role that P2P apps play in this fraud and the lack of consumer protections that result in the cost of scams falling on individual consumers. 

“Relying on consumers to accurately spot and resist fraudulent schemes run by sophisticated, professional criminals is unlikely to yield a more secure P2P payments system,” said Breyault. “We urge Congress and the Consumer Financial Protection Bureau to adopt regulations that put the onus for securing P2P platforms like Zelle where it belongs – on the banks and platforms themselves.” 

This is the second time this year NCL Vice President John Breyault has appeared before the Senate to advocate for stronger protections against fraud in our financial system. His full testimony can be found here.

Additional reading:

  • NCL VP testifies before Senate Banking Committee on the need for better protections against scams 
  • NCL releases Top Ten Scams report for 2023 fraud trends 

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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 applauds Supreme Court for siding with consumer protection in upholding CFPB’s constitutionality

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May 16, 2024

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

Washington, DC – The National Consumers League (NCL) is pleased to celebrate the victory for consumers in today’s Supreme Court decision. In upholding the constitutionality of the Consumer Financial Protection Bureau’s (CFPB) funding structure, the Court has rejected extremist legal theories and allowed the agency to continue its important work to maintain a fair financial marketplace and promote economic and racial justice.

“The Supreme Court delivered a blow to the payday lending industry who challenged the CFPB’s funding for their own commercial gain. This is good news for consumers across the country,” said Sally Greenberg, NCL’s CEO. “The Court’s ruling clears a cloud over agency’s work and makes clear that financial regulators will not be gutted on behalf of special interests.”

The Bureau’s funding structure was key to its independence from short-term political agendas, similar to the Federal Reserve Board and other key regulators. Without the CFPB, consumers would be vulnerable to a slew of junk fees, predatory collection practices, and unfair application processes for some of their biggest financial decisions.

Further reading:

  • NCL statement on Fifth Circuit decision to invalidate CFPB’s independence
  • NCL applauds the CFPB’s effort to prohibit junk fees in financial services
  • NCL supports CFPB’s proposal to remove medical debt from credit reports
  • NCL applauds decisive action by CFPB against fraudulent payments processor
  • NCL supports confirmation of Rohit Chopra as CFPB director
  • Leading consumer groups call on FTC and CFPB to update study on accuracy of consumer data

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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 applauds Congress’s passage of aviation consumer protection improvements

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May 16, 2024

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

Washington, DC – Yesterday, the House of Representatives passed a bill to reauthorize the Federal Aviation Administration (FAA) through 2028, sending it to the president. The legislation includes a number of wins for the millions of consumers who travel by air every year: airline vouchers cannot expire in less than five years, caregivers can sit with their minor children without paying an extra fee, and passengers will automatically receive a refund if their flight is cancelled.

The measure also strengthens the Department of Transportation’s (DOT) ability to hold air carriers accountable when they break the law by tripling the maximum civil penalty the Department may impose and creating an assistant secretary position for aviation consumer protection.

“The National Consumers League is grateful to the negotiators of this bill for working to improve the flying experience,” said NCL Vice President of Public Policy, Telecommunications, and Fraud John Breyault. “Without support from Senator Cantwell, Senator Cruz, Representative Graves, Representative Larsen, and their diligent staff, these important new consumer protections would not have made it to President Biden’s desk.

“We look forward to the president signing the bill into law and a robust enforcement regime from DOT. Particularly, we expect the FAA to act on its mandate from Congress to establish minimum seat sizes on airplanes—a directive Congress has given the agency twice now.”

Unfortunately, Congress missed a significant opportunity to enact structural change in how airlines are regulated. The airline industry still enjoys extraordinary privileges and remains protected from Federal Trade Commission and state government oversight. A tax break for add-on fees remains in place, encouraging air carriers to generate revenue from added charges instead of the base fare. And a provision that would have established bare-bones safeguards around the devaluation of frequent flyer rewards was stripped from the bill.

While there is still work to be done, the flying public undoubtedly secured important wins in this reauthorization. NCL is appreciative of the allies to consumers who championed our priorities on the Hill and we will continue to advocate for passengers as the legislation is implemented in the coming years.

Further reading:

  • Consumer advocates support federal review of air industry’s data collection practices
  • Full list of consumer and public interest advocates’ priorities for the FAA reauthorization
  • Consumer groups call for a moratorium on smaller airplane seats pending FAA safety review

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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.