Economic security, health and safety of nation: National groups call for adoption of pro-consumer policies – National Consumers League

December 11, 2008

Contact: 202-835-3323, media@nclnet.org

Washington, DC- Leaders of seven of the country’s leading public-interest groups are calling for the adoption of six major pro-consumer priorities, including the reinstatement of the White House Special Advisor on Consumer Affairs. As the economic crisis deepens, it is more important than ever for government leaders to deal quickly and effectively with pocketbook issues affecting every American consumer. The groups have developed an agenda of the top issues on which consumers should hold policymakers accountable in the coming Congress and new administration. The agenda was sent to President-Elect Obama and Congressional leaders (cover letter enclosed).

Leaders of the seven groups – Consumer Federation of America, Consumers Union, National Association of Consumer Advocates, National Consumer Law Center, National Consumers League, Public Citizen, and the U.S. Public Interest Research Group, representing millions of American consumers – have united behind this agenda in response to increasing risks to consumer rights and protections.

Some recent threats to consumer rights, protections and standards of living include: the financial crisis and mortgage meltdown, high and volatile oil prices, growing concerns over the safety of imports and food, and the rising cost of health care.

As a result of anti-consumer policies in these areas, the coalition has developed a six-point agenda to highlight some of the most critical issues facing the American public today. The leaders noted that Congressional passage of comprehensive Consumer Product Safety Commission reform this summer was a positive step, suggesting that Congress may be ready to consider other important consumer reforms.

As the events of recent months have shown, weak consumer protections don’t just harm individual Americans, but the economy overall. Inadequate laws and poor oversight of credit and financial services have led to a huge loss of wealth for many American families and helped trigger an economic recession. This agenda is not simply a way to protect consumers, but to increase the economic and health security of the country. The agenda is a key starting point for raising questions of policymakers about how they intend to protect the public interest, said the leaders of the seven organizations.

The consumer leaders are intent on continuing to build an influential consumer movement that will be a powerful force for change. The six-point agenda includes (summary followed by detailed explanations):

  1. Restore the United States Office of Consumer Affairs; Put a Consumer “Czar” In The White House.
  1. Rein in Wall Street Excesses, Protect Consumers from Abusive and Predatory Lending.
  1. Protect Consumers from Price-Gouging in Oil, Gas and Electricity Markets, and Take Steps To Provide Households With Access to Alternative Energy and Efficiency.
  1. Improve Consumer Access to Justice By Reinstating Legal Rights.
  1. Guarantee Safe, High Quality, Affordable Healthcare for Everyone.
  1. Ensure our Food and Products are Safe.

An Agenda to Close Growing Gaps in Marketplace Protections

1.Restore the United States Office of Consumer Affairs; Put a Consumer “Czar” In The White House

During this economic crisis, one extremely significant step the new Administration could immediately take would be to restore an Office of Consumer Affairs in the White House. Such an office, run by a prominent advisor to the president, would clearly demonstrate the critical nature consumer protection issues play in restoring and maintaining a sound economy. As inadequate consumer protection has permeated so many of the crises the nation faces and the work of so many different federal agencies, having a strong, centralized consumer voice in the White House is all the more critical.

The United States Office of Consumer Affairs (USOCA) was established by Executive Order by President Nixon. Under pressure from Congress, the Clinton Administration allowed the office to be closed. The office should be reinstated as it existed under the Carter Administration, the time when it was most effective.

Under the Carter Administration, the director of the Office of Consumer Affairs had regular and direct access to the President. The office gave a voice to consumers and balanced and supplemented the ever-present and extremely well funded business lobby and Department of Commerce. The office was instrumental in victories for consumers, including: energy-efficiency labels on products; a program that simplified English in government documents; consumer rights regarding overbooked airline flights; a cooperative bank that would offer low-interest loans to public-interest groups; and increased competition in the trucking industry. The precursor to the Office of Consumer Affairs, the Special Assistant to the President for Consumer Affairs, helped pass truth-in-packaging legislation during the Johnson Administration. The Special Assistant also worked on bills concerning truth-in-lending and helping those who have overextended credit. A similarly strong consumer presence at the highest levels over the last few years might have prevented the current credit crisis.

The Office of Consumer Affairs should be reinstated as a well-funded office with a clear mandate to influence legislation, write executive orders, intervene as a full party in adjudicatory proceedings, have input at policy meetings, etc. Ideally, the post should be filled with someone with known credentials in the consumer world, and consumer advocacy organizations should be consulted before the director is chosen. Most importantly, the director of the USOCA should have direct and frequent access to the President.

2. Rein in Wall Street Excesses, Protect Consumers from Abusive and Predatory Lending.

The global economy has been brought to the brink of disaster, and taxpayers have been forced to bear the trillion-dollar cost of a financial market bailout, as a direct result of Wall Street’s reckless misconduct and lawmakers’ and regulators’ failure to rein in industry excesses. This has led to a huge loss wealth for many American families and triggered an economic recession. The sharp decline in housing prices nationwide caused by predatory and unsound mortgage lending is a major cause of the now global credit crisis. Banks, auto lenders, credit card issuers, student lenders and payday loan companies also targeted low and middle-income families with unaffordable and high-cost credit.  As a result, home foreclosures, credit card delinquencies and personal bankruptcies now devastate millions of Americans each year. The explosive growth of predatory lending has occurred because consumer protections have been reduced in the last 20 years and new reforms have not been added to rein in harmful practices. Where states have attempted to prohibit abusive credit practices, federal policy makers have sought to override state protections. Meanwhile Congress and federal regulators have acted much too slowly to enact laws or regulations that curb these harmful loans. Lenders have fought reform, arguing that it is more important to preserve a 19th century “buyer beware” free market than to protect American families from becoming buried in debt they cannot afford. While new housing legislation takes modest steps to restore faith in the market, it does little to help consumers already in foreclosure nor to prevent continued abusive practices.

Early warnings about the systemic risks posed by unregulated credit derivatives, inadequate capital standards at financial institutions, including Fannie Mae and Freddie Mac, unreliable credit ratings, compensation practices that promote excessive risk-taking, and lack of transparency resulting from use of Structured Investment Vehicles and other off-balance sheet transactions went unheeded by federal regulators and Congress alike. Wall Street was able to fend off stronger investor protections by arguing that increased regulation would stifle innovation, burden industry, and drive business to less regulated markets overseas. As a result, investors have seen their investment portfolios decimated, traditional Wall Street institutions have either failed or stand on the brink of failure, and the global economy has sunk into recession.

Actions for Congress and the new administration: 1) develop a comprehensive financial restructuring plan that puts Main Street Before Wall Street, cures the flaws in the emergency legislation and prevents future catastrophes; 2) enact legislation that effectively prohibits abusive terms in mortgages and other loans, curbs lending without regard to ability to pay and provides effective relief to homeowners still caught in the foreclosure crisis (emergency provisions on foreclosure were grossly inadequate); 3) provide broad protections for credit card customers, including prohibiting unwarranted fees, retroactive interest rate increases, and payment allocation abuses; 4) protect consumers from predatory small loans such as payday loans, rent-to-own, auto title lending and refund anticipation loans, 5) restore bankruptcy as the final safety net for consumers caught by unaffordable mortgage, credit card debts and student loans, 6) restore the ability of states and individuals to enforce laws against predatory lending, and (7) adopt investor protection legislation and regulations that increase transparency and accountability of financial market participants, strengthen risk management practices, minimize conflicts of interest, and provide for strengthened regulatory oversight.

3) Protect Consumers from Price-Gouging in Oil, Gas and Electricity Markets, and Take Steps To Provide Households With Access to Alternative Energy and Efficiency.

Consumers and the American economy have been hit hard by sharply rising energy prices, especially for gasoline. Despite declining gasoline consumption, high inventory levels and increased production of ethanol, gasoline prices shot past $4 a gallon nationwide earlier this year. Natural gas, electricity and heating oil prices have also escalated. Electricity markets, particularly in states that deregulated and are now subject to oversight by the Federal Energy Regulatory Commission, have experienced sharp price increases. Although energy prices have declined recently, high prices through much of the last few years have forced moderate and lower income Americans to make painful choices to cutback spending on other necessities that are also increasing in price, such as food, healthcare and medicine. While energy prices are, for the time being, dropping, the nation cannot afford to be lulled into complacency. Future price hikes can be expected, home energy costs remain unaffordable for many families, especially those hit by the weak economy, and our nation’s continued dependence on fossil fuels threatens the economy, national security and the environment.

A major factor in rising gasoline prices has been the decline in gasoline refining capacity, brought on by mergers in the refining market and by deliberate decisions by oil company refiners to keep capacity tight. This has allowed a few very large companies to gain control of refining supply. The lack of effective regulation of financial and commodity markets has also led to the creation of a speculative energy “bubble” for energy commodities. Over the past two years, the cost of speculative trading has been over $40 a barrel of oil, or about $1 per gallon of gasoline.  The run up in gasoline prices led to excessive oil industry profits of over $200 billion above the normal level since 2002. Meanwhile, Congress has only recently acted to improve the dismally low fuel economy of passenger vehicles in the United States.

Actions for Congress and the new administration: 1) The government must give greater scrutiny to oil and refining company mergers, require greater competition and encourage the development of alternative fuels and energy sources that are environmentally safe and do not affect food prices. This would lead to lower prices, encourage smarter development of natural resources, and help make the U.S. more energy independent. 2) Congress and the Administration must ensure that the speculative bubble in energy and food commodities does not recur by closing loopholes created by the Commodity Futures Modernization Act and by poor oversight of the Commodity Futures Trading Commission. 3) The Administration must appoint a FERC chairperson who will ensure that all electric rates are “just and reasonable.” 4) President Obama must also ensure that the National Highway Transportation Administration set the highest possible fuel economy standards under recently enacted legislation, which requires that passenger vehicles achieve well in excess of 35 mpg by 2020, and increase funding for mass transit. 5) Finally, Congress and the Administration should continue to increase financial assistance to lower income families who cannot afford increased energy prices or who are hit by the weak economy, and provide meaningful assistance to help households afford alternatives to high energy prices such as rebates to purchase super fuel-efficient hybrid cars, incentives to make energy efficient improvements to homes and solar panel installation, financed in part by eliminating subsidies to the oil industry.

4. Improve Consumer Access to Justice By Reinstating Legal Rights.

Consumer legal rights have been under assault for years. While Congress has refused to grant private rights of action in any new federal consumer laws and has even inserted provisions attacking the authority of state attorneys general in new federal laws, powerful special interests have been busy taking away available state law legal remedies by inserting mandatory arbitration clauses in all consumer contracts. Meanwhile, federal regulatory agencies have asserted over-broad authority to preempt state enforcement and consumer common law rights and the Supreme Court, most recently in Riegel v. Medtronic, has upheld them.

Actions for Congress and the new administration: 1) Enact legislation to restore an unbiased and open justice system that remedies harms and holds wrongdoers accountable; 2) ensure a consumer’s right to choose alternative dispute resolution, judicial review, or a jury by barring pre-dispute mandatory binding arbitration clauses from consumer contracts; 3) ensure the viability and enforceability of federal consumer protection laws by updating outdated liability provisions, preserving access to counsel through fee-shifting statutes, and permitting enforcement by state attorneys general; 4) preserve state health, safety, and consumer protection laws by halting federal preemption; and 5) ensure that systemic wrongs are righted by providing for class actions when pervasive and expansive misconduct occurs.

5. Guarantee Safe, High Quality, Affordable Healthcare for Everyone.

The U.S. has by far the most expensive health care system in the world, spending 50% more per person than the next closest country, Switzerland. As health care costs continue to rise, families are paying a larger and larger share. Many people are one illness away from bankruptcy. Nearly 1.3 million full-time workers lost their health insurance in 2006. At the same time, insurance companies are spending billions to deny care while drug companies are spending billions on TV ads for drugs that most of us may not need.

We need common sense reforms that redirect our nation’s health care dollars into better care and give people real choice, including the choice to stay with their current doctor. Insurance companies must compete to give us the best quality care, rather than profiting by denying care, cherry-picking the healthy patients, and excluding people with “pre-existing conditions.” Doctors, hospitals and patients should be free to focus on treating and preventing illness, without the piles of paperwork and endless hours spent decipheringcodes and bills. Real choices must be grounded in real information about doctors, hospitals and health plans–not misleading information created by advertising agencies.

Actions for Congress and the new administration: Ensure that healthcare is affordable for all consumers by adopting cost-saving innovations in preventative care, pay for performance, chronic disease management, evidence-based medicine, and increased primary care by all payers: private and public.  Create private and public insurance pool options that allow consumers to share risk and use greater bargaining power to get a fair price for insurance and guarantee consumers cannot be denied coverage or face skyrocketing premiums when you change jobs, get sick, or have a pre-existing condition. Make sure everyone can take their kids to a doctor, and is protected from losing life savings due to illness. Give people the tools they need to choose a health plan, hospital, doctor or treatment that is right for them. Ensure that treatments and medicines people take are high-quality, safe and affordable. Medicare should have the power to negotiate lower drug prices like the Veterans Administration. We need stronger FDA enforcement on the safety of drugs, including more inspections of manufacturing facilities and a moratorium on the advertising of newly introduced drugs until we learn more about possible side-effects. We need to adopt information technology that protects privacy while providing consumers, doctors and pharmacists with important medical information. And we need broad public reporting about hospital-acquired infections.

6. Ensure our Food and Products are Safe.

Consumers’ beliefs that our food and product safety systems are working have been shattered by the many recent recalls involving tainted meat and produce, and even children’s toys. Lax oversight, agency cutbacks, and surging imports have resulted in an unprecedented number of recalls involving everything from Salmonella-laced peppers, E-coli in spinach, and pet food and dairy products adulterated with melamine, to children’s jewelry made of lead. In fiscal year 2007, there were 473 recalls involving over 25 million products, many involving children’s toys and cribs. In the first three quarters of this fiscal year, the CPSC has already announced more than 415 recalls.

We should require FDA to inspect all food production facilities on a routine basis, both domestic and foreign, and increase inspections at the border. Providing both USDA and FDA with comprehensive mandatory recall authority will also enable the agencies to remove contaminated meats and other foods produce more quickly than simply relying on the voluntary cooperation of companies. In order to act quickly and knowledgeably when unsafe food threatens us, FDA also needs to establish a comprehensive traceability system for unsafe and high-risk foods. The USDA and the FDA should also allow the public to know immediately the names of stores that receive recalled foods so that consumers have a way of protecting themselves when a contamination outbreak occurs. With food safety spread across 15 federal agencies and departments now, federal food safety activities should be combined into a single food agency governed by a modernized food safety law.  Congress should be commended for enactment of the CPSC Reform Act of 2008, a comprehensive pro-consumer reform that reinvigorates and reauthorizes a long-neglected agency. Similar actions should be taken for the NHTSA and FDA.

Actions for Congress and the new administration: Support comprehensive food safety reform. Adequately fund federal food safety activities by both FDA and USDA. Increase and enhance inspections of domestic and imported foods and products before they enter our shores and stores. Support and enhance activities for FDA and USDA to ensure that food producers are producing food in a safe and sanitary manner. Give the FDA and USDA mandatory recall authority to promptly remove tainted foods, meats and produce from our shelves. Appoint strong consumer advocates to the restored CPSC, ensure that it obtains its new, higher authorized appropriations, and carefully oversee CPSC’s implementation of the new law.

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About the National Consumers League

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

Fighting Common Rip-Offs: Worth the Hassle? – National Consumers League

By John Breyault, NCL Vice President of Public Policy, Telecommunications, and Fraud

Useful link of the day: Is the payback for fighting rip-offs worth the time and stress involved?

Consumers are ripped off on a daily basis. This is sometimes due to deliberate criminal fraud, but often due to simple negligence, either on the part of a business or consumer.

Fortunately, consumers usually have recourse when they’re ripped off, often through various agencies of their local governments. Of course, while there may be some satisfaction in getting repayment for a rip-off, the time and effort involved may not be worth the monetary repayment. This weekend’s New York Magazine featured an excellent article on how long it takes to resolve common consumer complaints and offers its opinion on whether the repayment is worth the effort.

While the article is specific to New York City, many localities offer similar services. If the 3-1-1 information service is available in your area, a quick call can put you in touch with the appropriate government agency in your town or city. Check out the New York Magazine article here:

(Hat-tip to the ever-useful Consumerist for the link.)

Save Money On Holiday Software: Think Open Source! – National Consumers League

By John Breyault, NCL Vice President of Public Policy, Telecommunications and Fraud

For many consumers watching their bank accounts, pricey gifts like computers may be out of reach this holiday season.  With even the least-expensive new computers costing several hundred dollars, the price is often just too steep to justify the expense.  On top of that, many of us overlook the cost that software plays in the total price of a new computer purchase.

Although many consumers are so familiar with proprietary software that it rarely occurs to them to consider the alternatives, there is some good news in sight: there is a world of free, open-source software alternatives to most of the more well-known proprietary software packages.

“What is ‘open-source’ software anyway,” you’re probably asking yourself right now.  Good question!

The majority of consumers are most familiar with “closed-source” or “proprietary” software.  This is generally software that is created by a for-profit company and sold through a retail channel (think: Best Buy or Amazon.com).  The software is rarely customizable by you, the end-user, beyond what the software maker designed into it.  End-users are generally prevented from redistributing the software by law and by security measures written into the software itself (most often a license key).

Open-source software, by comparison, can be written by for-profit companies, individuals, or non-profit organizations.  It is generally distributed for free, and the underlying source code is made public so that end-users can modify it as they wish.  Since the software is usually free, it can be shared between users under the provisions of a free license, such as the GNU General Public License.  To learn more about the differences between open-source and closed-source, check out the great Wikipedia entry on the topic.

From a consumer’s point of view, the biggest difference between open-source and closed-source software, aside from price (or lack thereof) is, most likely, customer support.  Modern software is extremely complicated.  It can break due to bugs, and many of us may need help using the software even when it is functioning correctly.  Closed-source software companies generally offer customer service over the phone or via the World Wide Web to address such issues.  Open-source software, on the other hand, is supported by its user-community.  For many consumers, this is the major turn-off on open-source.  Instead of having readily-accessible help when things go wrong, open-source users most often search the Web for the answer.  Fortunately, the user-communities of much of the most popular open-source software is very large, meaning that the answer to a common problem is often just a Google-search away.

With the differences between open-source and closed-source software models in minds, let’s now get back to our original topic:  How can open-source software reduce the cost of owning a computer?  The best way to illustrate this is by way of an example.  When most people think of word-processing, spreadsheet, and presentation software they first think of the Microsoft Office line of products (Word, Excel, and PowerPoint).  While Microsoft Office is a very powerful suite of products, backed by one of the largest and most well-respected companies on the planet, it isn’t cheap.  The cheapest version we could find, Microsoft Office Home and Student 2007, is currently listed at $99.99 on Amazon.com.  A hundred bucks is a lot of money, even in good economic times.  Open-source, similarly-featured alternatives to Microsoft Office include OpenOffice or Google Docs.  Best of all, they’re free!

A second example:  Many  consumers want to edit photos to share with friends and relatives.  The market leader for such software, Adobe Photoshop, starts at $75 for the consumer version, Adobe Photoshop Elements.  Here again, similarly-featured alternative exists, including  GIMP (short for GNU Image Manipulation Program), Picasa, and Krita.

It’s not a stretch to say that for most popular proprietary software applications, there are free, open-source alternatives that are adequate replacements.  From desktop-publishing (Scribus), to sound-editing (Audacity), to financial accounting (GnuCash), to anti-virus software (Clamwin), to full operating systems (Ubuntu, OpenSolaris), there is open-source software to meet most common computing needs.

Open-source software is not without its flaws.  However, from the point of view of a consumer, the rich variety and quality of open-source means that software costs do not have to be a barrier to owning a computer or making an existing computer more functional.

Hill Talk On Expanding Broadband – National Consumers League

by Sally Greenberg, NCL Executive Director

One of the challenges of the modern age is getting the latest and best technology out to the most remote and rural areas of the U.S. This week I was part of a panel that briefed the staffs of members in the House of Representatives on what we call “broadband deployment.” Broadband – or “high-speed internet” is the technology that most of us city dwellers use to connect quickly to the Internet. Cable and DSL service are examples of broadband, and they give us very fast service.

Don’t we all remember the days when we were hooked into the telephone jack and could wait 30 minutes for one document to come onto the screen? That was dial-up service. Well, broadband brings that document up in seconds today. Unfortunately, the more rural parts of the country cannot get access to broadband for a number of reasons: it’s too expensive for companies to get service out to them, or in the case of many low-income citizens, they cannot afford the monthly broadband charge, which can run over $50. And equally unfortunate, it’s impossible to get businesses to set up in areas where there is no broadband available, nor do residents want to move to areas where they don’t get high-speed Internet.

For the United States, increased broadband deployment means better education, more jobs, improved healthcare, more efficient government and a better quality of life accessible for all Americans, regardless of their location or socio-economic circumstances.

Our panel, which was co-sponsored with the Alliance for Public Technology and the Communications Workers of America, featured a woman from rural Virginia who had won an essay contest in which she described how broadband had changed her life. She was a bus driver who had lost her job, and while her little town 2 ½ hours from the nation’s capital, had only had broadband access for a few years, this high-speed Internet access enabled her to take college courses and prepare for a new career.

In my presentation, I noted the NCL’s history of working on rural electrification and the parallels between getting electricity to farms in the 1930s and getting broadband access to remote areas in the new millennium. The National Consumers League is the nation’s oldest consumer organization and was part of the consumer movement that worked to bring affordable and accessible electricity to rural areas, which was one of the major consumer issues in the first half of the 20th Century. The issue had an important champion. In 1924, a New Yorker who had been a promising national official and an unsuccessful candidate for Vice President went to Warm Springs, Georgia to recover from a polio attack. Years later, in 1938, President Franklin D. Roosevelt described his experience this way to more than 40,000 people during the dedication of a rural electric cooperative in Georgia:

Fourteen years ago a Democratic Yankee came to a neighboring county in your state in search of a pool of warm water wherein he might swim his way back to health. There was only one discordant note in that first stay of mine at Warm Springs. When the first-of-the-month bill came for the electric light for my little cottage, I found that the charge was 18 cents a kilowatt-hour – about four times as much as I paid in Hyde Park, New York. That started my long study of proper public utility charges for electric current and the whole subject of getting electricity into farm homes. So it can be said that a little cottage at Warm Springs, Georgia, was the birthplace of the Rural Electrification Administration.

When Roosevelt was elected President in 1932, most of the country was frozen in the Great Depression, but the utilities and a few other industries were making unprecedented profits. A lot of this played out during the mid-1930s.

Rural electrification was a great grassroots consumer movement; rural people wanted electricity in the 1930s. Eventually with the creation of the Rural Electrification Administration in 1934 through executive order, and through the use of electric cooperatives and grassroots efforts by rural communities who sent letters to Congress supporting rural electrification, these communities demanded legislative action and asked to borrow money to build their own lines. And eventually legislation passed in 1936 to electrify rural areas. Consumer organizations were very much a part of this campaign.

Many experts agree that government should treat Internet access like it did electrical access in the 20th century. As late as the mid-1930s, nine out of 10 rural homes were without electricity. Within four years of the passage of the Rural Electrification Act, the number of rural electric systems doubled, the number of consumers connected more than tripled, and the miles of energized line was five times greater, according to the National Rural Electrical Cooperative Association.

Today the challenge of getting broadband access to urban and rural areas persists. The Pew Internet and American Life Project released a survey in July, finding that 55 percent of American adults now have broadband access at home, up from 47 percent a year earlier and 42 percent in March 2007. By contrast, only 10 percent of Americans now have dial-up access. Despite the increase in overall broadband adoption, though, growth has been flat among African-American and low-income Americans. Of the Americans with no Internet access at all, about a third say they have no interest in logging on, even at dial-up speeds. Nearly 20 percent of nonusers had access in the past but dropped it. Older and lower-income Americans are most likely to be offline.

Consumer groups are an important voice in demanding that we meet the challenge of providing Internet access to both urban areas and rural areas. Yes, there are those who say they aren’t interested in broadband, but most rural people understand they need it to succeed in the 21st Century. Broadband access has become a necessity for businesses to set up shop in rural communities, for kids to do their schoolwork, to sell homes to newcomers in communities. Today’ farmers are like us. They went to college, they’ve had broadband access for years, and they don’t and cannot do without it.

Communities of color are demanding broadband in ever greater numbers:

  • African American access to the Internet has tripled over the last few years
  • 66 percent of Latinos with home access to the Internet now use broadband,

President-elect Obama’s technology policy supports this trend. “America should lead the world in broadband penetration and Internet access,” he has said. His technology policy calls for providing “true broadband to every community in America.”

Broadband access is an economic engine for rural and urban areas. Connected Nation, a group promoting Internet access, says in a recent report that “just a 7 percentage point increase in broadband adoption could result in $134 billion per year in total direct economic impact” to the U.S. “Providing remote access to data gives people many more options in terms of where they work and whom they work for,” wrote Ed Felten, a computer scientist and public affairs professor at Princeton University. “Bandwidth makes people more productive,” he wrote.

What policies are we recommending? The recent enactment of the S. 1492, the Broadband Data Improvement Act, a few months ago will help greatly, but it needs to be adequately funded. There’s been no commitment to fund it by Congress so far. That bill enjoyed broad bi-partisan support. One could argue that this bill is the broadband counterpart to the 1936 Rural Electrification Act.

The Broadband Data Improvement Act creates a national grant program to help states create statewide broadband initiatives, using viability mapping, grassroots demand, extensive research, and efforts to put computers into the hands of disadvantaged communities.

This new law also requires a comparison of broadband deployment at home with broadband deployment abroad. Senator Durbin said about the bill:

“Broadband has become essential to rural areas which still lack adequate and affordable access to the Internet,” and that this “bill helps close the digital divide, ensuring that no Americans are left behind in the 21st Century’s digital economy.”

“If the United States is to remain a world leader in technology, we need a national broadband network that is second-to-none,” said Senator Daniel K. Inouye, a key champion of this bill (because he also chairs the Senate Appropriations Committee, all important when it comes to funding). “The federal government has a responsibility to ensure the continued rollout of broadband access, as well as the successful deployment of the next generation of broadband technology. But as I have said before, we cannot manage what we do not measure. This bill will give us the baseline statistics we need in order to eventually achieve the successful deployment of broadband access and services to all Americans.”

Other policy recommendations include:

  • Modernize the Universal Service Fund to better reflect the realities of the digital age. Congress considered access to telephone services so vital that they created a fund to ensure universal, affordable access for low-income and rural consumers. But even though broadband has become an indispensable feature in the lives of millions of Americans, it remains out of reach for poor and rural citizens. It is time for policymakers to modernize the Universal Service Fund the program to support the deployment of broadband services.
  • Require the FCC to improve its data collection on broadband markets. Policymakers cannot adequately assess the problems in the broadband market, nor identify the most appropriate solutions, if the FCC provides poor information. The starting point should be a more precise measure of which geographic area have service (using a smaller unit than the ZIP code). Beyond that, carriers should be required to report the percentages of households where broadband service is available in every service area, the percentage of households that subscribe, and the average cost per megabit of throughput. This evidentiary record will help provide an accurate analysis of the problems we face and foster solutions that will achieve results.
  • Allow states to act where the federal government has failed. It is apparent that state governments cannot rely on the FCC to tell them where service is deployed in their states, much less rely on the Commission to foster competition within their states. State governments should look to the example set by ConnectKentucky and take on the task of bringing private actors and local governments together to tackle the broadband problem.

In conclusion, consumer groups are dedicated to providing greater Internet access to rural areas that don’t currently have access and to ensure that those who do have access but can’t afford the technology can get it. Broadband is necessary for so many reasons in today’s economy. The U.S. shouldn’t be 16th in broadband deployment. We should be at the top of the list.

    Choose gift cards wisely this holiday season – National Consumers League

    December 1, 2008

    Contact: 202-835-3323, media@nclnet.org

    Washington, DC- Although gift cards have grown in popularity and simplified holiday gift-giving stress for many consumers, not all gift cards are the same, warns the National Consumers League. This month, NCL is offering advice for reading the fine print and choosing the best gift cards in its “2008 Consumer Calendar Tips: Do We Have Tips for You!”

    The nation’s oldest consumer advocacy organization, NCL works to educate people about how to make wise decisions in today’s marketplace. Each month, NCL’s Web site, www.nclnet.org, will feature the calendar and tips for the month. Covering a range of subjects from medication safety, to avoiding scams, the tips are sponsored by major companies, government agencies, and organizations. The December tips about keeping out unwanted guests were sponsored by the Office of the Comptroller of the Currency. This month’s tips offer advice and information about gift cards and includes a tear-out wallet card for easy access to OCC’s Customer Assistance Group. NCL recently issued a “Gift Card Holder’s Bill of Rights,” calling on banks and retailers to make their policies and cards more consumer-friendly by lowering fees and reducing restrictions.

    The print version of the calendar was distributed to consumers free of charge through agencies and organizations around the country. There are no printed copies of the calendar remaining.

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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.

    Ready, Set, Shop! – National Consumers League

    Happy Cyber Monday, fellow consumers! The holiday shopping season officially arrived on Black Friday, the day after Thanksgiving. But many “e-tailers” are celebrating another important day for them today, Cyber Monday, when consumers are expected to return to work (and an Internet connection), armed with credit cards and PayPal accounts to virtually attack their gift lists.

    The Internet has revolutionized the way we do many things – communicate, work, play, and, yes, shop – but it hasn’t quite eliminated all of the hassle. In fact, there are some challenges – and consumer traps – unique to online shopping that consumers need to keep in mind, this season and year-round.

    Your friends at the National Consumers League have put together new tips for consumers trying to save a buck, avoid traffic and long lines, and keep their sanity this gift-buying season by doing their shopping online. Learn more here.

    Rubbing Elbows with Socially Conscious Entrepreneurs – National Consumers League

    By Sally Greenberg, NCL Executive Director

    As our financial infrastructure implodes and home foreclosures pile up, the reputation of the Wall Street and the business community has never been worse. What an interesting time, then, for a conference that brings together entrepreneurs and companies who are in business for goals that go far beyond making profit. I recently attended the Social Venture Network’s (SVN) fall gathering in San Diego. The National Consumers League has been a passionate advocate of corporate social responsibility. The League’s President Emeritus, Linda Golodner, sits on the International Standards Organization’s committee that is formulating guidelines for companies who strive to be socially responsible. We at NCL see as part of our mission pushing companies to adopt socially responsible practices – e.g., treating workers fairly, minimizing environmental impacts, giving back to the communities where they do business, abiding by and even exceeding health and safety laws, and making safe products.

    SVN has been around since 1987. The founders say that a book by economist and former Labor Secretary, Robert Reich, Tales of a New America (1987), inspired  them to bring together business leaders committed to social change and to merging social values with their business goals. Familiar brands like Ben and Jerry’s and the Calvert Social Investment Fund were early SVN backers.

    Today SVN’s membership includes hundreds of business who share a dedication to innovative social enterprises. They speak in a language that was new to me – “the triple bottom line– people, planet, profits.

    Here are a few of the interesting people I met at SVN:

    • Sarah Bratnober from Organic Farms, whose dairy products I’ve bought for years from my local grocery. The company serves small farmers and rural communities by combining two alternative business models—the family farm and the cooperative. Their 1,296 member farmers represent approximately 10 percent of the organic farming community in America.
    • Joel Mendelsohn, CEO of New Leaf Paper, started a company that leads the industry in the development and distribution of environmentally superior printing and office papers. New Leaf uses ultra-high post-consumer waste content, chlorine free bleaching, and non-wood fibers, to minimize the environmental impact of consumer and business paper consumption. They got a coveted 2008 Social Capitalist award from Fast Money Magazine
    • Adi Bemak, whose media education foundation produces independent films, showed “Consuming Children”  a documentary that shows an avalanche of food, clothing, and toy advertising to children starting at a infancy. The United States is the only industrialized country, apart from New Zealand, to allow corporate advertising aimed at children – and the film documents the violent games and toys marketed to young boys and the sexily-clothed dolls marketed to girls as young as five and six.
    • Greg Christian, who calls himself “Chicago’s Conscious Caterer,” specializes in green, local, sustainable, and organic cuisine. Christian also founded the Organic School Project (OSP), a pilot program within Chicago Public Schools that seeks to transform Chicago-area children into healthier, more mindful eaters. He told me he uses only local and organic produce when possible, buys his dairy products from farms in Wisconsin, and purchases meat from farms in the Mid-west that are free of growth hormones. Christian also practices water conservation, offers re-usable living botanical centerpieces, provides invitations printed on recycled paper, uses biodegradable service ware and eco-friendly cleaning supplies and donates un-served foods to local food banks.

    Listening to the stories about how these socially-conscious entrepreneurs got started – how they aligned their business goals with making a positive contribution to the community (and, by the way, created thousands of jobs in the process) – was inspiring and very much in line with NCL’s  mission to encourage business to align profits with a social mission. SVN has for years brought together socially-conscious business owners and start-ups.  In the current environment, when the reputation of business has hit rock-bottom, I wish that more of America could see these men and women who think about the “triple bottom line”  The excitement, the commitment, the energy, the ingenuity, and the hard work –  was nothing short of inspiring.

    Groups issue ‘Gift Card Holder’s Bill of Rights’ for holiday season – National Consumers League

    November 18, 2008

    Contact: 202-835-3323, media@nclnet.org

    Washington, DC—The National Consumers League (NCL), the nation’s oldest consumer advocacy organization, today called on issuers of gift cards—banks, credit card companies, and retailers—to go easy on consumers this holiday season by lightening up on fees and expiration dates on gift cards. NCL is asking gift card issuers to adhere to a “Gift Card Holder’s Bill of Rights,” setting out what advocates believe would be fairer terms and fees than those currently associated with the cards.

    NCL, joined by Consumer Action and the Montgomery County (Maryland) Office of Consumer Protection, is urging companies that issue gift cards—an industry that has mushroomed into a $97 billion annual business—to adopt more pro-consumer business practices.

    “With the worst economic times in a generation looming and many Americans facing job loss, decreased wages, and increases in the cost of health care, groceries, and other goods, this holiday gift-buying season may be a source of dread, not joy, for consumers watching their budgets,” said Sally Greenberg, NCL Executive Director. “The companies who profit from the rise in popularity of gift cards owe it to consumers to reduce their fees and expiration dates, improve the value of their cards, and compete for consumers’ business.”

    “Gift cards make great gifts, because they allow the recipient to get something they really need or want, but all too often they are rife with ‘gotcha’ fees and other anti-consumer traps,” said Linda Sherry, Consumer Action’s Director of National Priorities. “We urge gift card issuers to do the right thing and make sure their products have fair terms with no deceptive loopholes that erode their value.”

    “While stores in Maryland are prohibited from selling gift cards with expiration dates and fees during the first four years, that is not the law in all states,” said Montgomery County Office of Consumer Protection Director Eric Friedman. “In addition, banks continue to market cards with terms and conditions that are not favorable to consumers. We urge the marketplace to adopt this Bill of Rights for all gift card holders.”

    Gift cards, which come in two categories— traditional retail gift cards, or “closed-loop” cards, and those issued by banks and credit card companies, or “open-loop” cards—have become increasingly popular gifts in recent years. During 2007’s holiday shopping season, nearly 70 percent (68.9%) of consumers reported receiving a gift card. Gift cards sales in 2007 totaled $97 billion and are projected to top $100 billion in 2008.

    In 2006, the value of unused gift cards reached $8 billion. Depending on unclaimed property laws that vary by state, unused gift card funds eventually revert to either the state or issuing company. The Gift Card Holder’s Bill of Rights recommends, however, that gift card funds that go unused due to loss, theft, or failure to redeem should go into state coffers and be used to benefit consumers, rather than back into the pockets of the card issuers.

    The flexibility of gift cards has clear appeal to consumers, but terms and conditions may be turning many potential buyers away. According to the National Retail Federation, nearly one in ten consumers (9.8%) say they are discouraged from buying gift cards because they are worried about fees and expiration dates.

    “Through a dizzying array of extra costs that include maintenance fees, inactivity fees, dormancy fees, and card-replacement fees, as well as unreasonable expiration dates, and high point-of-sale fees, card issuers are pocketing more of the consumers’ money than we think is appropriate or fair,” said Greenberg. “To address this problem, we ask the companies that issue gift cards to consider the guidelines set forth in our Gift Card Holder’s Bill of Rights. We think customers will greatly appreciate having a few more dollars in their pocket, especially during this very rough economic time. ”

    Gift Card Holder’s Bill of Rights

    For more detailed explanations of each “Amendment,” or for consumer information about choosing and using gift cards wisely, visit www.nclnet.org/giftcards.

    1. Gift cards should not have expiration dates.
    1. The value of gift cards should not be reduced by arbitrary fees that diminish a card’s value.
    1. Fees assessed on a card purchase should not exceed five dollars or ten percent of the value of the card, whichever is less.
    1. Card replacement fees should not exceed two dollars or ten percent of the purchase price of the card, whichever is less.
    1. Cards with a balance of five dollars or less should be redeemable for cash with no fee.
    1. Balance inquiries should not deduct from the value of the card.
    1. Terms and conditions should be clearly disclosed.
    1. Unused funds should not go into the card issuers’ pockets, but should accrue to a state fund to be used for the specific benefit of consumers.
    1. Funds from the sale of gift cards should be segregated and held in trust accounts so as to be automatically honored in the event of the cards issuer’s bankruptcy.
    1. These rights should cover any electronic gift card with a banked dollar value.

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    About the National Consumers League

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

    About Consumer Action

    Consumer Action (www.consumer-action.org), founded in 1971, is a national non-profit consumer education and advocacy organization headquartered in San Francisco, with offices in Los Angeles and Washington, DC.

    About the Montgomery County (Maryland) Office of Consumer Protection

    The Montgomery County (Maryland) Office of Consumer Protection (OCP) investigates thousands of complaints each year involving automotive sales and repairs, new home purchases, home improvements, credit and financial issues, retail sales, internet services and most other consumer transactions. Consumers can check our latest Gift Card Reports at: https://www.montgomerycountymd.gov/consumer

    Reducing Gift Card Fees Is The Pro-Consumer Thing To Do – National Consumers League

    By John Breyault, NCL Vice President of Public Policy, Telecommunications, and Fraud

    With the holiday shopping season quickly approaching, many consumers have started to think about what to give loved ones, friends, co-workers, and others who manage to make the list this year–a harder feat for many, given the current economy. While many shoppers will spend hours looking for “just the perfect thing,” many others will choose to give gift cards instead.

    As anyone who has given or received a gift card in recent years can attest, today’s gift cards are not the flimsy paper gift certificates of yesteryear. (Remember those?) Almost every major retailer, bank, and credit card company offers gift cards, and they can be used as easily–in most cases–as a credit or debit card. This has driven an explosion in the popularity of gift card sales. In 2007 alone, the industry totaled up $97 billion in sales, up from $83 billion in 2006. To put that number is context, the entire FY2009 budget for the Department of Homeland Security was $58 billion.

    Last year, 7 out of 10 Americans received a gift card during the holiday season. (Great gift-giving minds think alike, eh?) Unfortunately, many consumers who have given or received gift cards have also noticed the cost of that convenience: fees, and lots of them.

    Gift cards issued by retailers (known as “closed-loop” cards) tend not to charge many fees since they make their money on the markup on merchandise and services. However, the cards issued by banks, credit card companies, and shopping malls — known as “open-loop” cards because they can be used at multiple retailers -– tend to pile on the fees. From fees charged for the “privilege” of buying the cards, to maintenance fees that deduct value from the card after six months, or even fees charged to check the balance on the card (not to mention the fees the card issuers get from merchants when the cards are swiped), these cards are veritable ATM machines for issuers.

    We believe that wherever possible, the money consumers invest in gift cards should stay in their pockets. This is why today we are joining with Consumer Action and the Montgomery County (Maryland) Office of Consumer Protection (OCP) to launch the “Gift Card Holder’s Bill of Rights.” The bill of rights spells out ten pro-consumer steps that gift card issuers can take to make gift cards a better deal for consumers. Given the fact that the economic crisis is likely to make this gift-giving season especially hard on consumers, we believe that gift card issuers should give consumers a break and eliminate or reduce their most egregious fees.

    From NCL’s press release announcing the Gift Card Holder’s Bill of Rights:

    “With the worst economic times in a generation looming and many Americans facing job loss, decreased wages, and increases in the cost of health care, groceries, and other goods, this holiday gift-buying season may be a source of dread, not joy, for consumers watching their budgets,” said Sally Greenberg, NCL Executive Director. “The companies who profit from the rise in popularity of gift cards owe it to consumers to reduce their fees and expiration dates, improve the value of their cards, and compete for consumers’ business.”

    While we wait for card issuers to improve their terms and conditions, there are several common-sense steps that consumers can take right now to avoid getting stuck with gift cards that deliver less value than they promise. We encourage you to check out the practical consumer tips in the new gift cards section of our Web site to learn more.

    A final bit of parting advice: Think of giving gift cards like giving a fruit basket. It’s a wonderful gift that can bring plenty of enjoyment, as long as they’re used up before the fruit goes rotten. Like fruit baskets, make sure and use up those gift cards early to avoid getting pickled by costly fees and expiration dates.

    Flying the Friendly Skies – National Consumers League

    by Sally Greenberg, NCL Executive Director

    I write from a US Airways flight traveling cross-country from Portland to Philadelphia. At the ticket counter this morning, I was chagrined to be reminded that checking my luggage – one piece – would cost me $15. This is the first time I’ve ever paid to check luggage. Getting out to the West Coast for a conference on Southwest Airlines recently, I didn’t have to pay to ship my bag, and I flew from San Diego to Portland on Alaska Air and didn’t have to pay for the bag then either. Despite my recent varied experiences, the US Airways employees at the checkout counter claimed “every airline” is charging for luggage.

    Once on the plane, the flight attendant rolled the cart past with drinks and snacks and headphones, announcing that cans of soda pop would cost $2.00, headphones $5.00, and snacks were available for 5 or 10 bucks.

    This conversation followed the pricing announcement:

    Me: You guys at US Air are the worst on nickel and diming consumers
    Flight Attendant: Don’t say ‘you guys.’ Our union fought management on all these charges.
    Me: Who is your union?
    Flight Attendant: Communication Workers

    My ears perked up. The Communications Workers of America holds a seat on the National Consumers League’s Board of Directors. My curiosity piqued, I made my way to the back of the plane a little later and struck up a conversation with two US Airways employees. Turns out that the employees haven’t had a raise in years. In fact, they tell me they’ve taken a series of pay cuts over the past decade.

    Yes, of course, we all know the airline industry has been hit very hard by the increase in fuel prices, but those same prices have fallen significantly in the past several months, and the airlines are still collecting the same fuel surcharges on international flights. USA Today reported on October 28 that, “Despite lower jet fuel prices, fuel charges on international tickets are much higher than a year ago.” Domestic fares – 60 percent – also have fuel surcharges averaging around $170 a flight, though Southwest Airlines doesn’t tack on a fuel surcharge, and USA Today says US Airways has reduced its domestic flight surcharges by 11 percent, noting that the prices still aren’t coming down in proportion to jet fuel prices. All of this has prompted U.S. Senator Bob Menendez (D-NJ) to write to 11 airline CEOs, asking them to reduce fuel charges as soon as possible. Industry spokespeople defend the increases, arguing that fuel increases were significant and have been dropping only recently.

    Meanwhile, US Airways is also pocketing more cash by demanding that consumers pay to check a single bag of luggage, and (talk about cheapskates!) asking me to pay two bucks for a soda! In 2007, US Airways executive William Douglas Parker raked in $5,444,996 in total compensation, according to the Securities and Exchange Commission. While large airlines fuel surcharges are estimated to add $10-20 million a year, neither US Airway employees nor consumers seem to reap the added revenues. If the airlines need to charge more for tickets, do it. But don’t call it a fuel surcharge and double the amount when the cost of fuel is down significant. It is business practices like this – and paying the CEO a 5.5 million-dollar-salary while forcing airline employees to take pay cuts – that make consumers and workers cynical about business.