by Sally Greenberg, NCL Executive Director

Today’s news that the U.S. Food and Drug Administration appears to be cracking down on food manufacturers’ product claims that cross the line into “medical” is welcome to consumer advocates like the National Consumers League. Last fall, we sent a *letter to the FDA Commissioner Andrew von Eschenbach, complaining that the makers of Cheerios seem to be going too far with their cholesterol-lowering claims about the product. Looking at a big yellow box of Cheerios at the time, we saw that the manufacturer, General Mills, was boldly enticing consumers to “Join the Challenge and Lower Your Cholesterol 4% in 6 weeks.”  The back panel repeated the claim, and directed consumers to “Sign Up Today at CheeriosChallenge.com”Our beef with all this was that General Mills’ claims of lowering eaters’ cholesterol levels promises consumers a health benefit, merely by consuming Cheerios® breakfast cereal without accompanying changes in diet or lifestyle, and this type of “magic bullet” health claims aren’t allowed by the laws that the FDA enforces. Cheerios isn’t medicine; it can’t make claims that taking it has a health-improving affect.

So now that FDA has issued a *warning letter to General Mills about our shared labeling concerns, we are hopeful that: a. General Mills will clean up its act quickly and stop making misleading claims about its food products and b. this is a sign that those in charge of our very important federal regulatory agencies are interested in cracking down on similarly misleading claims, which are widespread in today’s marketplace.

For more than 100 years, NCL has been concerned about the misleading, deceptive labeling and marketing practices by food and other producers. NCL volunteers staffing a booth at the 1904 St. Louis World’s Fair demonstrated to fairgoers that canned green beans touted by food processors as a labor-saving home product were adulterated with green dye. Since then, NCL has continued to work tirelessly to ensure that foods, drugs, and other consumer products are safe, healthful, and effective; that their contents are presented clearly and completely; and that advertisements promoting them are fair and honest. We’ve voiced concern over misleading labeling in more recent years, such as those containing sloppily-used terms like “natural” and “fresh,” and we’ll continue to work to ensure the products marketed to consumers are fairly and accurately represented by their manufacturers.

Critics, such as the *NBC Today Show’s Dr. Nancy Snyderman, are suggesting that the FDA has better things to do than go after a cereal company on claims like this. But these critics are getting it wrong. Misleading labeling has plagued consumers for many years and comes at great risk to consumers, not only related to their health but to their pocketbooks. Consumers who are misguidedly confident they are getting a daily dose of cholesterol medicine every morning in their cereal may not seek expert medical guidance from their health care practitioners. Cheerios is not an acceptable substitute for quality medical care.

Further, the high-profile nature of what the FDA conveyed in this letter to General Mills, whose Cheerios is the most popular breakfast cereal, gets the federal agency a lot of bang for its buck and sends a message to other food companies that they mustn’t exaggerate claims about a food having the ability to cure diseases when foods cannot do that.

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

by Sally Greenberg, NCL Executive Director

In the past several weeks, I’ve had two occasions to think about the effects of those ubiquitous binding mandatory arbitration clauses that are found in so many consumer contracts today. Two weeks ago, I spoke on a panel at an American Bar Association meeting on the Arbitration Fairness Act and advocating for an end to forcing consumers into mandatory arbitration. Then last week, I visited Congressional offices with homeowners whose houses had been built with such shoddy workmanship that they were unliveable – and yet they couldn’t seek remedies in court because of mandatory arbitration clauses in their contracts and the homebuilder himself owned or controlled the arbitration service. Adult children of nursing home residents described how their elderly parents were talked into signing arbitration clauses and subsequently developed deadly infections because of mistreatment and neglect, but the surviving children we barred from getting their cases heard in court because of a BMA clause, and the arbitrator sided against them. The companies offering arbitration actively seek the business of corporate clients, often promising them positive outcomes. In other words, the business of offering arbitration in consumer cases has become increasingly corrupted and biased.

What are these odious BMA clauses and how do they work? The clauses are buried in a contract you agree to as a condition of getting the service or good. The provisions contain some version of the following: “if there is a dispute between the parties the exclusive forum for determining remedies is arbitration carried out by the XX (one of three arbitration companies)” . That is, you can’t go to court, not even small claims court, you can’t bring a class, you can’t have a judge decide your case. They were described to me by corporate lawyer as a “risk management tool for corporate America.” That is pretty accurate, because these clauses prevent companies who engage in wrongdoing from being held accountable in a court of law. And they have worked beautifully to protect wrongdoers and emboldened them to add more and more of these clauses in their agreements with consumers.

If you think you aren’t affected by a BMA clause, think again. Anyone who’s signed up for a credit card, bought a computer, bought a cellphone, taken out a line of credit, rented a car, or engaged in any of the millions of transactions consumers deal with every day has agreed to one of these clauses, most often without knowing it.

That is why consumer groups and many others support the *Arbitration Fairness Act—HR 1020 in the House sponsored by Congressman Hank Johnson (D-GA) (the Senate bill doesn’t have a number yet) — which will bar pre-dispute mandatory binding arbitration in consumer and employment contracts. There’s nothing wrong with arbitration or mediation as an alternative to court if both parties agree to take this route AFTER the dispute has arisen and voluntarily. But forcing consumers and workers—60 percent of employment contracts apparently contain such clauses, and workers must agree to them if they want the job—into a private system of “justice” —which charges them a fee to get their case heard, deprives them of a judge, the right to submit and have the rules of evidence enforced, have a decision based on the law, have a written record, the right to appeal, and have a public record of the adjudication – is wrong and must end.

Moreover, consumers are deprived of counsel because few lawyers will take on cases if there’s an arbitration clause involved; the deck is stacked against the client and the lawyers find it hard to get paid. Faced with insurmountable odds, consumers or workers often are unable to fight for their rights, even if they have a strong case, because the arbitration system is so skewed against them.

A powerful coalition of consumers, workers, civil rights leaders, families of nursing home patients, and many other groups are seeking passage of the Arbitration Fairness Act in order to restore justice to a system that’s been hijacked by corporate interests. We know we’ll have a major challenge going up against the corporate entities that defend these clauses by making the dubious claim that they are “good for consumers” because, they argue, they provide “quicker, cheaper and more equitable resolution of cases.” If these BMA clauses are good for consumers, don’t force consumers into it, let them decide for themselves to opt for an alternative to court. If the system is fair, including the right to enter into class actions, the parties will choose arbitration.

Right now, powerful interests have commandeered the legal system, making it work as a shield that keeps them from being held accountable in the event that a homebuilder has engaged in wholesale consumer fraud in construction, or an employer has fired someone because they are African American, or a nursing home has neglected or abused an elderly resident so terribly that she dies of severe infection. The Arbitration Fairness Act will correct these abuses; NCL and other consumer groups intend to work tirelessly to unmask the corruption in the BMA system and see it addressed once and for all through the enactment of Arbitration Fairness Act.

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

by Sally Greenberg, NCL Executive Director

Three cheers for President Obama’s speaking out publicly against some of the worst abuses in the credit card industry. Mr. Obama called to the White House the heads of banks issuing these cards and gave them a dressing down. No more “anytime, any reason rate hikes,” he said. Credit cards companies should offer a “plain vanilla, easy to understand, simplest terms possible” card for the average user, and not bury hidden charges and fees in the fine print of the contract.

Consumer groups have long urged Congress to reform the most odious practices of  the credit card industry, including calling for a ban on mandatory arbitration clauses in all their contracts and barring class actions for users who have complaints against their credit card issue. We’ve called for bans on universal default – a practice that sends your credit card interest rates up if you default on another unrelated payment, say your mortgage. In a recent Washington Post article, a reader who had perfect credit but miscalculated her payment date and was two days late on a bill saw her interest rate shoot up. She was told this hike was “automatic.”

We applaud the President for using his bully pulpit to call out the rampant abuses in this industry.  Earlier this year, the Federal Reserve issued regulations to curb many of these abuses, but those rules won’t go into effect into effect next year. NCL has joined with a host of other consumer groups in a letter to Congress supporting House and Senate bills to codify into law many of the Fed’s rules. Among the bills’ features are banning interest rate increases on existing balances unless payment is more than 30 days late and forbidding “double-cycle billing,” the practice of charging interest on debts paid off the previous month. The bills would require 45 days’ notice for a rate increase on your credit card account.

We hope the President will weigh in with Congress in support of these all-important issues. His voice will be needed to overcome the vocal opposition from the industry and their supporters in Congress.by Sally Greenberg, NCL Executive Director

Three cheers for President Obama’s speaking out publicly against some of the worst abuses in the credit card industry. Mr. Obama called to the White House the heads of banks issuing these cards and gave them a dressing down. No more “anytime, any reason rate hikes,” he said. Credit cards companies should offer a “plain vanilla, easy to understand, simplest terms possible” card for the average user, and not bury hidden charges and fees in the fine print of the contract.

Consumer groups have long urged Congress to reform the most odious practices of  the credit card industry, including calling for a ban on mandatory arbitration clauses in all their contracts and barring class actions for users who have complaints against their credit card issue. We’ve called for bans on universal default – a practice that sends your credit card interest rates up if you default on another unrelated payment, say your mortgage. In a recent Washington Post article, a reader who had perfect credit but miscalculated her payment date and was two days late on a bill saw her interest rate shoot up. She was told this hike was “automatic.”

We applaud the President for using his bully pulpit to call out the rampant abuses in this industry.  Earlier this year, the Federal Reserve issued regulations to curb many of these abuses, but those rules won’t go into effect into effect next year. NCL has joined with a host of other consumer groups in a letter to Congress supporting House and Senate bills to codify into law many of the Fed’s rules. Among the bills’ features are banning interest rate increases on existing balances unless payment is more than 30 days late and forbidding “double-cycle billing,” the practice of charging interest on debts paid off the previous month. The bills would require 45 days’ notice for a rate increase on your credit card account.

We hope the President will weigh in with Congress in support of these all-important issues. His voice will be needed to overcome the vocal opposition from the industry and their supporters in Congress.

The Savvy Consumer blog will be taking a break for the next few days to staff the 2009 National LifeSmarts Championship. We know you’ll miss us terribly, so come visit us at our official nationals blog! We’ll be posting competition updates, team photos, and stories from the national competition — and the 30 state champion teams who will start arriving in St. Louis tomorrow.

See you back at the Savvy Consumer blog next week!