Groups offer support for Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act of 2021

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December 9, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org or (412) 945-3242

Washington, DC—The National Consumers League, Business Travel Coalition, Consumer Federation of America, Consumer Reports, and U.S. PIRG have signed onto a letter to Members of Congress in support of the Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act of 2021. Their letter appears below:

Dear Chairman DeFazio, Ranking Member Graves, Chairman Larsen, and Ranking Member Graves:

The undersigned consumer advocacy organizations support the Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act of 2021. This bill would protect consumers from unreasonable fees that airlines have reimposed as consumer demand to fly has rebounded from the pandemic.

Millions of consumers are annually charged excessive fees for checking baggage, changing reservations, canceling flights, and other services.[1] These fees are a major profit center for the airlines. For example, U.S. airlines collected $5.8 billion in baggage fees alone in 2019.[2] Compare this to analyst estimates that it costs airlines less than $20 per bag flown to provide the service.[3]  Furthermore, exaggerated change and cancellation fees are especially punitive as consumers cannot plan for unexpected events that force them to adjust their reservations.

The capture of more than 80% of domestic air traffic by just four U.S. airlines is a clear predicate of the rise in ancillary fees.[4] The non-competitive nature of the industry has allowed predatory practices to go unchallenged for too long. To be clear, airlines have the right to charge appropriate fees to cover operational costs and to make a profit. However, the supra-competitive amounts that airlines collect for providing basic services are unjustifiable. Prior to some ancillary fees being waived during the COVID-19 pandemic, such add-on fees were a steadily increasing source of revenue for the industry.[5] Now that the airlines’ moratorium on many of their fees has ended, we are concerned that this trend will resume.

The federal government must act to protect consumers from being forced to pay billions of dollars in bogus charges. The FAIR Fees Act, which has received bipartisan support,[6] would bring much-needed relief to travelers by requiring fees to be reasonable and reflect the actual costs of the services provided.

In addition to this immediate cost-saving benefit to consumers, the FAIR Fees Act would also direct the Department of Transportation to review any other fees charged by airlines and work to reduce airlines’ untaxed revenue. Since the IRS does not consider baggage fees or other ancillary fees to be related to the transport of a person, airlines do not pay excise taxes on the earnings they receive from these charges.[7] As ancillary charges have become a major source of revenue for the industry, this loophole has allowed airlines to avoid (conservatively) hundreds of millions of dollars in federal taxes.[8] Therefore, reining in ancillary fees would help reduce the amount of untaxed income this industry receives.

We applaud Representative Cohen for his continued leadership in protecting consumers from the exorbitant ancillary charges found on too many plane tickets. We urge your respective committees to report the legislation without delay.

Sincerely,

National Consumers League
Business Travel Coalition
Consumer Federation of America
Consumer Reports
U.S. PIRG

 

cc:       Members, House Committee on Transportation & Infrastructure

[1] USA TODAY. Shopping for flights? Change fees and other pre-pandemic penalties are back or returning soon on cheapest tickets. April 2, 2021. Online: https://www.usatoday.com/story/travel/airline-news/2021/04/02/covid-travel-airlines-change-fees-return-cheap-tickets-american-united/4805128001/

[2] CNBC. US airlines charged almost $5 billion in baggage fees last year—here’s how to avoid them. May 16, 2019. Online: https://www.cnbc.com/2019/05/15/us-airlines-brought-in-almost-5-billion-dollars-in-baggage-fees-last-year.html

[3] McCartney, Scott. “What It Costs An Airline to Fly Your Luggage,” Wall Street Journal. (November 25, 2008). Online: https://www.wsj.com/articles/SB122757025502954613 (Note: $15 in November 2008 is equal to $19.11 when adjusted for inflation in September 2021, per the U.S. Bureau of Labor Statistics.)

[4] Openmarketsinstitute.org. Airlines & Monopoly. Online: https://www.openmarketsinstitute.org/learn/airlines-monopoly

[5] Statista.com. Total ancillary revenue in the airline industry from 2011 to 2020. December 4, 2020. Online: https://www.statista.com/statistics/788849/airline-industry-ancillary-revenue/

[6] Office of Senator Edward J. Markey. “FAA Bill a Missed Opportunity to Protect Passengers from Ridiculous Airline Fees, Says Senator Markey.” Press release. (October 3, 2018) Online: https://www.markey.senate.gov/news/press-releases/faa-bill-a-missed-opportunity-to-protect-passengers-from-ridiculous-airline-fees-says-senator-markey

[7] Smarter Travel. If Fees Were Taxed, Would Airlines Ditch Them? July 16, 2020. Online: https://www.smartertravel.com/if-fees-were-taxed-would-airlines-ditch-them/

[8] Testimony of Dr. Gerald Dillingham (Director of Civil Aviation Issues, U.S. Government Accountability Office) before the House Subcommittee on Aviation. (July 14, 2010) (“However, if checked bag fee revenues that airlines reported in fiscal year 2009 had been subject to the excise tax on domestic travel, it would have generated about $186 million, or somewhat less than 2 percent of the Trust Fund revenues for 2009.”) Online: https://www.congress.gov/event/111th-congress/house-event/LC6763/text?s=1&r=9

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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.

National Consumers League statement on the passage of the INFORM Consumers Act

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November 17, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org or (412) 945-3242

Washington, DC—The National Consumers League (NCL), America’s pioneering consumer advocacy organization, today applauded the House Committee on Energy and Commerce for its vote to report out H.R. 5502, the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act.

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

Over the past 20 months, the COVID-19 pandemic has highlighted the important role that online sales platforms play in connecting consumers to the marketplace. As consumers have flocked to these marketplaces, the need for these platforms to better address unsafe products, counterfeiting, and the policing of third-party sellers has become ever more urgent.

Providing consumers with basic information about whom they are buying products from and how to contact the company is a cornerstone of consumer protection. We strongly support Congresswoman Schakowsky’s and Congressman Bilirakis’ bipartisan bill and urge the full House of Representatives to swiftly approve this legislation.

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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.

National Consumers League launches FactsAboutRecycling.org to inform consumers about recyclability, sustainability of food and beverage packaging

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November 15, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org or (412) 945-3242

Washington, DC—Today, on America Recycles Day, National Consumers League (NCL) launched FactsAboutRecycling.org, an information hub where consumers can learn more about what actually happens to the food and beverage packaging they toss in the recycling bin. The new site houses an animated video to help explain the recycling system, correct misinformation proliferated through marketing, and educate and empower consumers to make environmentally sustainable purchases.

“Just because something can be put in the recycling bin doesn’t mean it will truly end up being recycled,” said Sally Greenberg, NCL’s executive director. “Consumers deserve to know the truth about the sustainability of their purchases, so they can make the most informed decisions possible.”

Building upon NCL’s sustainability and honesty-in-marketing work over the past year, including infographics, podcasts, and a white paper entitled Examining Sustainability, Consumer Choice, and Confusion in Food and Beverage Packaging, FactsAboutRecycling.org gives consumers and environmental advocates fresh insight into the true sustainability of plastic, glass, metal, and cartons.

“Misleading marketing claims don’t just harm consumers; they can harm the environment and exacerbate the ongoing plastic pollution crisis. Better information will support smarter purchasing,” said Greenberg.

For more information, visit www.FactsAboutRecycling.org.

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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.

During ‘Striketober,’ standing up for a USPS that benefits consumers and workers

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By Eden Iscil, Public Policy Associate

Workers across America are taking action to hold employers accountable for low pay and poor working conditions. In what’s being called “Striketober,” 10,000 John Deere employees, 14,000 Kellogg’s workers, and 24,000 Kaiser Permanente staff have gone on strike. Additionally, 60,000 film and television workers belonging to IATSE threatened to withhold their labor, resulting in a deal for more favorable contracts. At NCL, we support workers advocating for better conditions and compensation. 

While it is generating fewer headlines, the actions of US Postal Service employees are just as important for consumer and worker welfare. Recent postal worker employee protests in Minneapolis highlight the indispensable public service these workers provide to millions of Americans daily. Those protests were prompted by a visit from Postmaster General Louis DeJoy, who is infamous for his 2020 attempt to degrade mail services at the same time that COVID-19 necessitated mail-in voting for millions of Americans. Importantly, DeJoy has come under renewed scrutiny for his 10-year plan, which would lead to significantly delayed mail deliveries. 

Given the importance of delivering mail promptly, we urge Congress and the Biden Administration to take a more active role in preventing Postmaster General DeJoy’s continued attacks on the Postal Service. Millions of Americans rely on the Postal Service for delivery of life-saving medication, receipt of their veterans and Social Security checks, and other important mail. Unfortunately, the impacts of DeJoy’s 10-year plan are likely to disproportionately affect rural communities and older Americans.   

We know such policies are harmful to everyday Americans from the many times they were previously attempted. Following DeJoy’s plans for a mail slowdown in 2020, veterans were forced to find alternative access to their medications and 350 million pieces of mail were delayed. We need to challenge such regressive policies that are implemented at an enormous cost to consumers. 

The threat that DeJoy’s recommendations pose to efficient U.S. mail delivery has been known since the summer of 2020. Congress and the Administration must act to get USPS back on the right track. 

Watchdog group to present annual awards to incoming CFPB Director Chopra, Michigan Governor and AG, and SEIU Local 2015 President Verrett on Tuesday, 10/12

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October 11, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org or (724) 799-5392

Washington, DC—The National Consumers League (NCL), the nation’s pioneering consumer and worker advocacy organization, will honor Rohit Chopra, incoming Director of the Consumer Financial Protection Bureau, Michigan Governor Gretchen Whitmer, and Michigan Attorney General Dana Nessel, with its highest honor, the Trumpeter Award, on Tuesday, October 12 in Washington, DC.

In addition to the Trumpeter Award, NCL will honor April Verrett, President of Service Employees International Union Local 2015 in Los Angeles, with the 2021 Florence Kelley Consumer Leadership Award, named for NCL’s first general secretary and one of the most influential figures in 20th Century American history.

MEDIA ADVISORY

What: National Consumers League’s 2021 Trumpeter Awards
When: Tuesday, October 12, 2021 | 7 pm Dinner and Presentation of Awards
Where: The Mayflower Hotel | Grand Ballroom | 1127 Connecticut Ave, NW, Washington, DC 20036

The National Consumers League, founded in 1899, has been honoring visionaries in consumer and worker protection with its annual Trumpeter Award since 1973. Past honorees include: Senator Ted Kennedy, the award’s inaugural recipient, as well as Labor Secretaries Hilda Solis, Robert Reich, and Alexis Herman, Senators Carl Levin and Paul Wellstone, Delores Huerta of the United Farm Workers, U.S. Representative John Lewis, and other honored consumer and labor leaders.

Last year’s Trumpeter recipients were Federal Communications Commission Commissioner Jessica Rosenworcel and journalist Vicky Nguyen. Attorney General for the District of Columbia Karl Racine was recipient of the Florence Kelley Consumer Leadership Award.

This year’s Trumpeter Awards will feature a reception, dinner, and speaking appearances by NCL leadership and the honorees, as well as:

  • Maria Cardona, CNN Commentator & Principal of Dewey Square Group
  • Former FTC Chairman Jon Leibowitz
  • Grace Whiting, President and CEO of the National Alliance for Caregiving
  • Karl Racine, Attorney General of the District of Columbia
  • NCL Board Chair Dominique Warren, Deputy Director of Government Relations at Service Employees International Union

To learn more, visit nclnet.org/trumpeter_awards.

Due to COVID restrictions, attendance at this event is limited. Members of the media may inquire about attendance options by contacting Carol McKay, (724) 799-5392.

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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.

Ten consumer advocacy organizations call for action on aviation consumer protection priorities in letter to DOT

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August 27, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242

The Honorable Pete Buttigieg
Secretary
United States Department of Transportation
1200 New Jersey, SE
Washington, DC 20590

RE: Promoting DOT’s Aviation Consumer Protection Mission and Passenger Priorities

Dear Secretary Buttigieg:

The undersigned consumer advocacy organizations appreciated the opportunity to meet with you on July 27. We welcomed your close attention to our recommendations for actions the Department of Transportation (“DOT” or “Department”) should take to promote and enhance consumer protection in the air travel marketplace. We are encouraged that under your leadership, consumer protection will not be an afterthought at the DOT.[1]

In that regard, we write today regarding the key priorities we identified during our meeting and to request meetings with appropriate officials as you move forward on implementation.

First, as we discussed, we hope you will be publicly and personally highlighting consumer protection as a key part of DOT’s mission. DOT is the sole consumer protection agency, at any level of government, with authority over the air travel industry. Your public statements about your expectations for consumer protection in the air travel marketplace will put the airlines on notice that the DOT under your leadership will vigorously enforce existing consumer protections and seek new ways to better protect travelers as the industry emerges from the COVID-19 pandemic, and going forward.

Second, on the specific priorities we raised with you, all of which you were receptive to addressing, we ask that you help arrange for us to meet with the appropriate officials at DOT and FAA with authority to address these priorities. Those priorities include:

  • Taking immediate action to address the airlines’ practice of issuing expiring travel vouchers for flights not taken on account of the pandemic. The four major U.S. airlines had $10 billion in unused travel credits on their books at the end of 2020. Many billions of dollars in credits will expire this year, due in no small part to inconsistent airline rules regarding when such credits must be used.[2] As was the case last year, travelers continue to be caught in an untenable situation: either endanger their health by flying despite the risks to themselves and others from the resurgent COVID-19 virus, or lose their substantial ticket investments. We request that you publicly call on the airlines to grant refunds, or at the consumer’s option, provide indefinite extensions and transferability of vouchers, for travel that was scheduled to have occurred since the pandemic began. We also urge you to investigate whether the airlines’ failure to do so would constitute an unfair or deceptive practice under DOT’s §41712 authority. We appreciate that DOT has recognized the importance of addressing the more than 100,000 complaints it received in 2020 related to ticket refunds stemming from the COVID-19 pandemic. However, the ongoing enforcement action against Air Canada[3] and the planned NPRM on airline ticket refunds[4] do not adequately address the magnitude of this unprecedented situation. To date, no domestic airline has been fined by DOT for any anti-consumer transgressions identified during the pandemic. Conversely, DOT has not hesitated to fine passengers when justified, with fines totaling more than $1 million in 2021 alone.[5]
  • Fulfilling Congress’s directive that DOT address airlines’ family seating practices. Under the airlines’ current family seating practices, families traveling with small children must either forgo purchasing the most affordable classes of tickets or risk being seated far from their children during their flight. Recognizing this situation as indefensible, Congress directed the DOT to review and “if appropriate, establish a policy” directing air carriers to ensure that young children can be seated with their families at no additional cost.[6] But to date, DOT has limited its response to publishing a web page to educate the public about family seating and the availability of the DOT’s complaint process.[7] Separating young children from their families during flights not only creates needless anxiety; it also poses a safety risk during in-flight emergencies, and even puts children at increased risk of sexual assault.[8] We urge DOT to act on Congress’s directive and initiate a rulemaking to mandate that families with small children be seated together at no additional cost. In our view, the airlines’ family seating practices also constitute an unfair or deceptive practice under DOT’s §41712 authority,
  • Acting on Congress’s mandate that FAA establish minimum seat size standards. There currently exists no federally-mandated minimum seat size standard for U.S. airlines. Combined with badly out-of-date Federal Aviation Administration (“FAA”) emergency evacuation testing standards, the lack of a minimum seat size standard puts passengers at significant risk. Congress,[9] consumer groups,[10] an FAA advisory committee,[11] and the DOT’s Inspector General[12] have all called attention to this risk. The FAA’s continued resistance to establishing a minimum seat size standard led Congress to direct the FAA to do so no later than October 2019. It is now nearly two years since that deadline passed. The DOT should implement this Congressionally-mandated action without further delay.

As leisure travelers continue to power the airline industry’s taxpayer-supported recovery from the COVID-19 pandemic, the time for action by the DOT to address anti-consumer industry practices is now. The DOT cannot stand by while travelers endure unprecedented delays and cancellations, struggle to obtain refunds, are prevented from sitting with our children, and are squeezed into ever-shrinking and increasingly unsafe seats. The importance of prioritizing accountability for consumer protection has been highlighted anew in recent months, as the domestic airline industry has experienced a series of operational meltdowns, leading to thousands of delayed, canceled, and rescheduled flights, disrupting the travel plans of millions of American consumers.

Thank you again for the commitment you have given us to ensuring protection and fair treatment for the flying public.

Sincerely,

Business Travel Coalition
Consumer Action
Consumer Federation of America
Consumer Reports
EdOnTravel.com
FlyersRights.org
National Consumers League
Travelers United
Travel Fairness Now
U.S. PIRG

cc:

The Honorable Maria Cantwell, Chair, Senate Committee on Commerce, Science, & TransportationThe Honorable Roger Wicker, Ranking Member, Senate Committee on Commerce, Science, & Transportation
The Honorable Kyrsten Sinema, Chairman, Senate Subcommittee on Aviation Safety, Operations, and Innovation
The Honorable Ted Cruz, Ranking Members, Senate Subcommittee on Aviation Safety, Operations, and Innovation
The Honorable Peter DeFazio, Chairman, House Committee on Transportation & Infrastructure
The Honorable Sam Graves, Ranking Member, House Committee on Transportation & Infrastructure
The Honorable Rick Larsen, Chairman, House Subcommittee on Aviation
The Honorable Garret Graves, Ranking Member, House Subcommittee on Aviation
Blane Workie, Assistant General Counsel for the Office of Aviation Consumer Protection, DOT
John Putnam, Acting General Counsel and Deputy General Counsel, DOT

 

[1] Josephs, Leslie. (2021, July 28) Legroom, vouchers, seating fees: Consumer advocacy groups take complaints to DOT. CNBC.com. https://www.cnbc.com/2021/07/28/legroom-vouchers-seating-fees-consumer-travel-groups-take-complaints-to-dot-.html

[2] McCartney, Scott. (2021, March 17) The Airline and Hotel Pandemic Vouchers That May Prove Worthless. Wall Street Journal. https://www.wsj.com/articles/the-airline-and-hotel-pandemic-vouchers-that-may-prove-worthless-11615986078?mod=article_inline

[3] U.S. Department of Transportation. (2021, June 15) U.S. Department of Transportation’s Office of Aviation Consumer Protection Initiates Enforcement Proceeding Seeking Approximately $25 million Against Air Canada for Extreme Delays in Providing Required Refunds [Press release]. https://www.transportation.gov/briefing-room/us-department-transportations-office-aviation-consumer-protection-initiates

[4] https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202104&RIN=2105-AF04

[5] Federal Aviation Administration. (2021, August 19) FAA Fines Against Unruly Passengers Reach $1M [Press release]. https://www.faa.gov/news/press_releases/news_story.cfm?newsId=26440

[6] FAA Extension, Safety, and Security Act of 2016. §2309. https://www.congress.gov/114/plaws/publ190/PLAW-114publ190.pdf

[7] U.S. Department of Transportation. (2020, March 4) Family Seating. https://www.transportation.gov/individuals/aviation-consumer-protection/family-seating

[8] Rosato, Donna. (2020, March 4) Airlines Fall Short in Fixing Family Seating Problems. Consumer Reports. https://www.consumerreports.org/air-travel/airline-fixes-to-family-seating-problems-fall-short/

[9] Silk, Robert. (2020 August 17) Travel Weekly. https://www.travelweekly.com/Travel-News/Airline-News/Congress-FAA-to-set-standards-for-seat-size-delay

[10] FlyersRights.org. (2021 August 17) The Case of the Incredible Shrinking Airline Seat. https://flyersrights.org/f/the-case-of-the-incredible-shrinking-airline-seat

[11] Federal Aviation Administration. “Emergency Evacuation Standards Aviation Rulemaking Committee. https://www.faa.gov/regulations_policies/rulemaking/committees/documents/index.cfm/committee/browse/committeeID/757

[12] U.S. Department of Transportation Office of Inspector General. (2020 September 16) FAA’s Process for Updating Its Aircraft Evacuation Standards Lacks Data Collection and Analysis on Current Evacuation Risks. https://www.oig.dot.gov/sites/default/files/FAA%20Oversight%20of%20Aircraft%20Evacuations%20Final%20Report%20-%2009-16-20.pdf

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.

National Consumers League calls on Congress, DOT to investigate flight cancellation crisis

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August 6, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242

Washington, DC—The National Consumers League (NCL) is today calling on Congress and the U.S. Department of Transportation to take action to address the dramatic increase in flight cancellations that American consumers have been forced to endure this summer. In just the last 48 hours, Spirit Airlines canceled more than 400 flights, nearly 60 percent of its schedule, and American Airlines canceled nearly 350 flights. This follows on the heels of delays for nearly 10,000 flights and hundreds of additional cancellations in June.

NCL is urging Congress and the DOT to address this unacceptable situation and hold the airlines accountable for skirting around the requirements of agreements to accept more than $50 billion in tax-payer funded bailouts in 2020.

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

“The situation in America’s airports has reached a crisis point. The airlines gladly accepted tens of billions of dollars in bailout money last year in order to save jobs. Nonetheless, they are now blaming thousands of cancellations and delays on not having enough workers.

“Who do they think they are kidding? The airlines are playing fast and loose with consumers, and it must stop. This scandal is stranding millions of Americans at the height of the summer travel season. Secretary Buttigieg and leaders in Congress should immediately take action to hold the airlines accountable for their failure to maintain adequate staffing. Airlines that cannot accommodate their passengers should immediately issue refunds with no questions asked. Interline agreements should be required so that passengers can be easily booked onto alternate airlines to complete their journeys. Congress should immediately open an investigation into whether the airlines’ use of early retirement packages and unpaid furloughs, combined with the threat of layoffs, constituted an illegal evasion of the bailout legislation’s staffing requirements.”

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.

NCL to Congress: Strengthen fraud protections for users of P2P payment apps

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August 3, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242

Washington, DC—With fraud linked to the COVID-19 pandemic at record levels, the National Consumers League (NCL) today cited the use of peer-to-peer (P2P) payment apps by scammers as a significant contributor to the problem. In testimony before the Senate’s Financial Institutions and Consumer Protection Subcommittee, NCL Vice President John Breyault urged Congress to extend key consumer fraud protections to cover victims of scams who are tricked into sending money via P2P apps.

According to a 2020 Nerdwallet survey, roughly 4 in 5 Americans (79 percent) have used mobile payment apps. The explosive growth of P2P apps has accelerated significantly during the pandemic. Research firm Insider Intelligence estimated that the transaction volume for P2P payments will increase by roughly 37% in 2021, with total annual transaction volume over P2P apps expected to surpass $1 trillion by 2023.

“The same factors that are fueling the rapid growth of P2P payment platforms during the pandemic – low-cost, nearly instantaneous payments made via a mobile app – have made P2P a payment method of choice for scammers,” said Breyault. “If these platforms are making the decision to skew their services towards speed and convenience at the expense of safety and protection, then they must take responsibility for those choices.”

In 2020, the Federal Trade Commission received nearly 62,000 complaints from consumers who sent money to fraudsters via payment apps or similar services. Agencies such as the Consumer Financial Protection Bureau and organizations like the Better Business Bureau have seen similar complaint spikes. Data from security firms Sift and Chargeback suggest that fraud rates on P2P apps may be three to four times higher than on credit or debit cards.

To address this fraud, NCL called on Congress to enact legislation that extends the fraud protections debit and credit card users rely on to users of P2P payment apps. In addition, NCL urged Congress to pass new laws to strengthen consumer protections, including requiring P2P platforms to display information about scams targeting P2P apps and maintain toll-free customer support lines.

“The lack of consumer protections for users of P2P payment platforms must not be ignored,” said Breyault. “It is clear that absent regulatory incentives, effective self-regulation by the P2P services will be stymied in the name of protecting transaction volume growth. Congress must act.”

To read NCL’s testimony , click here.

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.

Leading consumer groups call on FTC and CFPB to update study on accuracy of consumer data

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July 23, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242 and Linda Sherry, (202) 544-3088, linda.sherry@consumer-action.org

Washington, DC—Leading consumer groups are calling on the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) to update a key 2012 study on the accuracy of consumer data at the credit bureaus in a letter sent to both agencies.

The National Consumers League and Consumer Action, two leading consumer advocacy organizations working to promote pro-consumer policies on the federal level, noted in their letter to FTC Chairwoman Khan and Acting CFPB Dirctor Ueijo that policy leaders in Congress and the White House had been citing the 2012 study in recent hearings and events and they were concerned that the data policymakers were using was almost 10 years old.

“Much has happened since 2012 that impacts the accuracy of consumer data, starting with the rise of technology, increased data breaches by bad actors, the NCAP settlement and of course a pandemic and economic crisis. It is critical that we re- examine the accuracy of the credit bureau data in light of these developments…” the Consumer Action and National Consumers League letter reads. “…We worry about the unintended consequences if policymakers fashion new laws based on old facts.”

A full copy of the letter can be found here.

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.

National Consumers League applauds House repeal of national banking regulator’s Predatory Lending Rule; Urging Congress to act soon on interest rate cap

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June 29, 2021

Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242

Washington, DC—The National Consumers League (NCL) applauds the House for voting for the Congressional Review Act resolution to overturn the OCC’s “fake lender” rule, which allowed predatory lenders to evade state interest rate laws by putting a bank’s name on the paperwork. In a 218-208 bipartisan vote, The U.S. House of Representatives voted to approve SJ Res 15, a resolution under the Congressional Review Act (CRA), which was introduced by Senators Chris Van Hollen (D-MD) and Sherrod Brown (D-OH). A companion resolution was introduced by Rep. “Chuy” García (D-IL). Now that both chambers of Congress have approved this resolution, we look forward to President Biden signing the bill into law.

“We applaud the House’s bipartisan vote to repeal this harmful rule which facilitates rent-a-bank schemes,” said NCL’s Public Policy Manager Sarah Robinson. “This is an important step in preventing predatory lenders from targeting vulnerable communities. We urge President Biden to quickly sign this bill into law to protect consumers.”

NCL was part of a broad coalition of more than 400 organizations representing all 50 states and the District of Columbia calling on Congress to overturn the “fake lender” rule, which threatens to “unleash predatory lending in all fifty states.”

The rushed “fake lender” rule took effect in December and was issued by the Office of the Comptroller of the Currency (OCC). The rule protected “rent-a-bank” schemes whereby predatory lenders (the true lender) launder their loans through a few rogue banks (the fake lender), which are exempt from state interest rate caps. The rule had overridden 200 years’ worth of case law allowing courts to see through usury law evasions to the truth, and replaced it with a pro-evasion rule that looked only at the fine print on the loan agreement.

A broad, bipartisan cross-section of experts and officials have called on Congress to repeal the fake lender rule. They include a bipartisan group of 25 state attorneys general, concerned the rule would effectively gut their state usury laws. The Conference of State Bank Supervisors, National Association of Consumer Credit Administrators, National Association of Federally-Insured Credit Unions, Credit Union National Association, Military Officers Association of America, Faith for Just Lending, and many other groups also support Congress overturning the rule.

According to national polling, two-thirds of voters (66%) are concerned about the ability of high-cost lenders to arrange loans through banks at rates higher than the state laws allow.

This victory will stop predatory lenders from charging 100% to 200% APR and make all lenders adhere to state laws.

NCL now urges the Congress to take up the Veterans and Consumers Fair Credit Actand cap interest rates nationally on all consumer loans, including payday and car title loans. It is crucial that the Congress take up this bill that was introduced by Rep. Garcíaand Rep. Glenn Grothman in the last Congress. This is a critical piece of legislation that will protect all consumers from predatory lending. We look forward to working with Congress and our state delegation to pass this important piece of legislation.

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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.