NCL statement on Delta Airline’s mass cancellations – National Consumers League

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August 11, 2016

Contact: Cindy Hoang, National Consumers League, cindyh@nclnet.org, (202) 207-2832 

Washington, DC—In light of this week’s system-wide failure at Delta Airlines and subsequent cancellations of thousands of flights, the National Consumers League (NCL) today calls on Congress to investigate the lack of consumer protections when airlines suffer from widespread outages. The following statement is attributable to Sally Greenberg, executive director of NCL:

“It is outrageous that while airlines are enjoying record profits, they remain unable to provide the most basic level of customer service. Delta’s system failure that resulted in flight cancellations was compounded by ineffective interlining agreements between carriers, which left consumers stranded and without alternative transportation options. This failure is yet another example of how the lack of competition is harming consumers. It is up to leaders in Congress to hold the airlines accountable and to demand stronger consumer protections from industry and the Department of Transportation to not only ensure that this never happens again, but to also ensure that consumers receive the refunds they deserve for their canceled flights.”

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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.

Happy 5th Anniversary to the CFPB – National Consumers League

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Since its inception five years ago, the Consumer Financial Protection Bureau (CFPB) has worked tirelessly to protect consumers from deceptive and abusive financial practices through its implementation of rules, programs, and new protective financial tools. For the past three years, under the direction of Richard Cordray, former Attorney General of Ohio, the CFPB has handled over 900,000 consumer complaints with 97 percent of those complaints receiving timely replies.  Over 25 million consumers will receive over $11.4 billion in relief from CFPB enforcements.  

The CFPB is originally the brainchild of Senator Elizabeth Warren (D-MA), who first proposed the agency in 2007 during her time as a Harvard Law School Bankruptcy Law author and professor, in order to protect consumers from, in her words, the “tricks and traps” of financial products and practices. When Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010, it created the CFPB. President Obama then appointed Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau. Richard Cordray was later appointed director and confirmed in July 2013.

The National Consumers League (NCL) applauds the CFPB on its very successful five years of protecting consumers in financial markets and will continue to support the CFPB in its efforts to crack down on the abuse and deception of consumers. NCL would like to take this opportunity to highlight some of the great work that the CFPB has accomplished thus far, specifically:

  • The CFPB created the Consumer Complaint Database that allows the CFPB to send complaints about financial products and services to companies for response on the consumer’s behalf. The complaints received by the CFPB are published on the agency website after the company responds, or after 15 days. The CFPB thus allows consumers to be heard–by other consumers, banks, debt collectors, and others under the agency’s jurisdiction. This process gives consumers a voice which helps to improve the marketplace. 
  • The CFPB has proposed restrictions on the use of forced arbitration clauses in consumer financial contracts.  It aims to prohibit financial companies from using these clauses to block class-action lawsuits; forced arbitration clauses take away the right of consumers to seek relief and hold companies accountable when they have engaged in corporate wrongdoing. The CFPB proposal will help even the playing field for consumers in their interactions with financial institutions. 
  • The CFPB proposed a rule to end payday debt traps that would require lenders to determine whether consumers have the ability to repay payday, auto title, and certain other high-cost loans. The CFPB is concerned that consumers are being set up to fail with loan payments that they are unable to repay. This proposed rule would protect consumers from falling into the trap of paying off payday loans by taking out another loan they cannot afford, thus creating piling debt upon debt and creating a vicious cycle of impossible-to-pay-back predatory loans.
  • The CFPB is considering a proposal to overhaul the debt collection market where new protections would limit collector contact and help ensure the correct debt is collected.  Debt collection companies would be required to have more and better information about the debt before they collect. Companies would be required to limit communications, clearly disclose debt details, and make it easier to dispute the debt they purport to collect.  Debt collection generates more complaints to the CFPB than any other financial product or service. The proposal would increase consumer protections.
  • The “Know Before You Owe” program is a mortgage initiative designed by the CFPB to help consumers understand their loan options, shop for the mortgage that’s best for them, and avoid costly surprises at closing. The Know Before You Owe disclosure rule replaces four disclosure forms with two new, less complicated ones. The CFPB also provides consumers with tips and checklists to help avoid foreclosure and understand mortgage statements. Additionally, the CFPB recently proposed a rule that expands foreclosure protection by providing surviving family members and other homeowners with the same protections as original borrowers.

NCL thinks this is a very impressive track record of accomplishments over a mere five years. Hats off to the excellent staff at the CFPB, which includes many devoted civil servants looking to make the marketplace fairer and more equitable for consumers. And most of all, thank you to Richard Cordray for enduring the slings and arrows of some members of the corporate community, who have had little positive things to say about the work of the CFPB. Consumers owe the professionals at this federal agency a debt of gratitude for carrying out their mission–protecting consumers from unfair and abusive financial practices–with determination, purpose and effectiveness. Happy 5th Anniversary to the CFPB. 

NCL statement on settlement with BBUSA Bakeries USA – National Consumers League

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April 20, 2016

Contact: NCL’s Cindy Hoang, cindyh@nclnet.org, (202) 835-3323

Washington, DC–The National Consumers League (“NCL”) and BBUSA Bakeries USA (“BBUSA”) are pleased to announce that they have resolved consumer-related litigation pending in the Superior Court of the District of Columbia, NCL v. BBUSA Bakeries USA, Case No. 2013 CA 006548 B. NCL and BBUSA recognize the importance of a focus on nutritional content in bread product offerings and ensuring that customers have nutritious options.  Without admitting liability, BBUSA has agreed to provide additional disclosures on the back of product packaging and on the Thomas’® and Sara Lee® websites and to make a donation to Feeding America.

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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.

The impact of overdraft fees on consumers – National Consumers League

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By Hannah Rudder, NCL Intern

More than three quarters of the largest U.S. banks allow their customers to overdraw their accounts when they lack sufficient funds in order to cover the transaction for a fee of $35, on average. The Consumer Financial Protection Bureau (CFPB) found the median transaction amount of purchases that resulted in an overdraft fee was only $24. Additionally, the CFPB study revealed that 18 percent of account holders pay the vast majority of all overdraft fees triggered by debit cards, checks, and automated clearing house electronic charges.  

The banks’ overdraft fees cause financially vulnerable consumers to leave the banking system. Thirty-one percent of consumers without a bank account reported high or unpredictable account fees as one reason for not having an account, while 13 percent cited it as the primary reason for not having a bank account. Overdraft fees are unexpected and unpredictable because most banks do not give their customers notice of an overdraft until two or three days after the incident. In the meantime, the consumer continues to overdraw his or her account, incurring more overdraft fees. The CFPB study found that more than two-thirds of consumers would prefer that the bank decline the transaction rather than assess an overdraft fee. 

The Pew Charitable Trusts recently released the findings of a study conducted on “heavy overdrafters,” those who incur over $100 in overdraft and non-sufficient funds fees. Pew conducted this survey out of concern for consumers because overdraft is high risk, in that it lacks the consumer protections that accompany other credit products. It found that most heavy overdrafters are:  Millennials or members of Generation X; renters rather than homeowners; and those with low incomes. See below. Furthermore, overdraft fees consumed nearly a full week’s household income of heavy overdrafters. 

Half of the heavy overdrafters incur six or more overdraft fees annually and 42 percent paid seven or more overdraft fees. Heavy overdrafters tend to have lower incomes than the rest of the U.S. population, with most reporting an annual household income of under $50,000. This means that overdrafts hit those who can least afford these predatory fees. Debit cards are the most common transaction method for heavy overdrafters, with the actual value of the debit card transaction being relatively low, around $24.  Seventy percent of heavy overdrafters are employed. 

Younger consumers in the Millennial generation may be more affected by these overdraft fees because they are more likely to use debit cards. Additionally, they may be more vulnerable to overdraft fees because many are managing finances independently for the first time. For example, many college students are opening their first accounts for financial aid refunds, and the outside companies that distribute these funds promote their own cards. The Department of Education has adopted rules banning the charging of overdraft fees on accounts used for student aid, which will go into effect this month. 

The results of the Pew survey show that overdraft now serves as a form of short-term credit for many consumers. However, overdraft lacks the requirements that financial institutions use to verify customers’ ability to repay debt before extending credit and provide a reasonable time to repay, as well as limits on late fees. 

Pew urges the CFPB to write new rules to ensure that overdraft programs are safe and designed only for infrequent and accidental occurrences. This could be achieved by limiting: the size of overdraft fees, the frequency with which they can be incurred, and overall cost. A limit of six overdrafts a year would save the 42 percent of heavy overdrafters, who incurred seven or more fees in the past year, a median of $210 annually. The Federal Deposit Insurance Corporation (FDIC) published guidance suggesting that banks should give customers a reasonable opportunity to choose a less costly alternative and decide whether to continue with fee-based overdraft coverage. 

Frequent overdrafts are a financial burden, especially because the fees are oftentimes hidden and unpredictable. These fees cause many consumers to leave the banking system, with 13 percent of consumers without banking accounts citing overdraft fees as the primary reason, and forces them to use cash other alternatives, like payday loans with predatory interest rates. 

Pew also suggests that the CFPB enact rules to limit the negative effects of overdraft fees and ensure that overdraft is not being used as short-term credit. It suggests that overdraft fees be reasonable and proportional to banks’ cost of covering overdrafts or to the overdraft amount. Financial institutions should charge no more than six small overdraft fees in any 12-month period that are proportional either to the banks’ cost of covering overdrafts or to the overdraft amount, and these fees should be limited to one per negative-balanced episode. If that limit is reached, then any further overdrafts should be covered under the rules for credit. Additionally, banks should post deposits and withdrawals in a fully disclosed, objective, and neutral manner that does not maximize overdraft fees. 

NCL applauds Pew’s report and accompanying recommendations. Imposing these predatory fees on lower income Americans and Millennials who are just beginning to manage their own finances is unacceptable. We hope the CFPB takes action to minimize the impact of these odious charges. 

In the meantime, we support the following strategies to avoid these exorbitant overdraft fees, or at least their frequency:

  • Set up text or email notifications that alert you when your balances are below a certain level.
  • Avoid opting out of overdraft coverage and simply have the card declined if there are insufficient funds.
  • Most banks offer to link a checking account to a savings or money market account, so that money transfers from the savings account to the checking account when there is not enough money in the checking account to cover the transaction. Opt in for this option if possible.
  • Finally, the last, and perhaps the easiest: Carefully monitor the balances in the accounts as well as individual transactions.  

Reflections on the RNC and DNC – National Consumers League

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Last week I attended the Democratic National Convention in Philadelphia. What a contrast with the Republican convention in Cleveland, which I also attended, the previous week. The RNC was overwhelmingly white (there were approximately 18 black delegates at the Republican National Convention.

Yes, eighteen, or roughly 0.7 percent of the 2,472 national delegates in Cleveland, the lowest percent since 1912, according to Daily Kos) – by contrast, the DNC was 50 percent people of color. At the RNC, I attended some great programs during the days. However, the activities on the street were, at times, downright scary. I blogged and posted photos on Facebook of the demonstrations and characters on the streets around the convention. I like to think that Diane Arbus[1] would have envied some of those photos.

Many of the speeches at the RNC were also dark and foreboding, describing the U.S. military as a “disaster,” claims that United States is on a dangerous path toward tyranny and violence, the Democratic candidate is a “Lucifer” and chants aimed at Hillary of “guilty” and “lock her up.”

Last week’s DNC was decidedly different in spirit and mood: upbeat, optimistic, diverse, and joyful. It featured a far more diverse crowd, a huge millennial presence – female and male – with young folks exuding a palpable excitement about the first woman ever nominated to be President. Thankfully for people like me, I saw none of the misogyny or hate so much in evidence the week before.

And we can be very grateful for one more thing: there was no violence at either the RNC and DNC. This wasn’t an accident; both cities avoided violence because of meticulous planning by law enforcement. The fact that both conventions were peaceful is a miracle given the nastiness of this Presidential race, and in the RNC’s case, the white supremacists threatening to come to Ohio, and the state law permitting gun owners to sling AK15 lightweight assault rifles over their shoulders like out of Gunsmoke.

We can’t discount the anger of Bernie-or-bust supporters at the DNC, who continue to cling to the notion that the nomination was stolen from them. For the record, Sanders received 3 million fewer votes than Clinton and had around 970 fewer pledged delegates. Even so, every Democrat I talked to, including elected officials, embraced much of Bernie Sanders’ platform: higher minimum wage, repeal of Citizens United, adjusting the growing gap in wealth.

In any event, huge kudos should go to officials in each city for their careful planning and for keeping attendees safe. 

During the daytime at both conventions, I attended events sponsored by NCL donors on women in politics and health care, and including one in Philadelphia we co-hosted, underwritten by Eli Lilly on fighting Alzheimer’s. Senators Debbie Stabenow (D-MI) and Ed Markey (D-MA) spoke. Stabenow is working in Congress to increase research and funding for Alzheimer’s, and Markey talked about his brilliant mother’s descent into the illness, and how we must demand that NIH more robustly set a timetable for finding a cure. B. Smith, the glamorous and successful restaurant owner who suffers from the illness, came with her husband, who spoke eloquently about her determination to beat the disease. She stood stoically by his side as he noted that communities of color and women are more likely to get Alzheimer’s and more research is needed to understand why.

NCL has many friends in Congress. Janette Fennell, who runs KidsandCars.org, and I drove to Wells Fargo Field on Wednesday to hear President Obama, Vice President Biden and his wife Jill Biden, VP Nominee Tim Caine and many others speak. We rode with Congresswoman Jan Schakowsky (D-IL), the democratic House co-sponsor of The Cameron Gulbransen Kids Transportation Safety Act of 2008. When I was Senior Product Safety Counsel at Consumers Union, Janette and I worked together on this bill to require that all cars have rearview cameras so toddlers don’t get backed over and killed because they cannot be seen behind the vehicle.

Then-New York Senator Hillary Clinton was our Senate Democratic co-sponsor. Schakowsky and Clinton came to know one another well in the course of trying to get this bill passed. I enjoyed watching Schakowsky’s TV interview the next day describing Hillary Clinton as a wonderfully generous colleague and ally in Congress. Senator John Sununu (R-NH) and Rep Peter King (R-NY) were our Republican co-sponsors for that bill, and they were key to getting it enacted and signed into law by President George Bush. Though a Republican, Congressman King also speaks highly of working with Senator Clinton and her staff on the legislation.

This bill was enacted eight years ago, but full implementation won’t happen by in 2018. By then, every car should have a rearview camera.

So back to the convention. It’s hard to fully capture the excitement and energy in the hall throughout the week. The young women and men cheering wildly for Hillary … the “I’m With Her” buttons, bumper stickers, hats and t-shirts … the African American and Hispanic women and men chanting in support of their candidate … the disability rights activists, the full embrace of LGBT members, the union presence … I ran into Randi Weingarten, President of the American Federation of Teachers, at the Emily’s List event; her union of teachers has for decades famously deployed its millions of members door-to-door for candidates.

Indeed, attendees at the DNC understood this is a turning point in American history. For the first time in 240 years, the United States has a woman running for President who has been endorsed by a major party. As a life-long feminist and head of a women-founded pioneering organization like NCL, being in the hall when Hillary came to the podium to accept the nomination felt like a fulfillment of the wishes and hopes of so many American women throughout our nation’s history. I have to believe that NCL’s founders and leaders—towering figures in their own right, each of them enormously talented—Florence Kelley, Josephine Goldmark, Francis Perkins, Eleanor Roosevelt—would have savored the moment.

What is particularly vindicating for feminists is hearing the most powerful men in the world, President Obama, former President Bill Clinton, VP Joe Biden, billionaire and former NYC Mayor Michael Bloomberg, Senator Tim Kaine, endorse a woman to be our next President. American women have been waiting generations for this moment. No, sexism and misogyny won’t disappear if we have a woman president. Women still earn less than men and sexual harassment, sexual assault on campuses, and discrimination in the workplace will be with us for a long time. But this is a transformative moment for women in America and around the world.

I remember a friend telling me she attended college and law school with Hillary Clinton. While they were at Wellesley together, Hillary was regarded as so very talented that her classmates believed she would be the first woman president of the United States. They were dismayed when she decided to follow her hayseed boyfriend to Arkansas! They were sure she’d be lost to them forever. Well, I guess their instincts were right.

This will be a difficult and long few months until the November election. But it will be full of firsts. Our daughters and sons are watching the glass ceiling be broken; and just as we watched Barack Obama make history as the first successful African American candidate for the presidency, we at NCL will be in the front row watching with awe and excitement the first woman nominated by a major party running for the highest office in the land.

[1] Diane Arbus, as her Wiki page notes: was an American photographer and writer noted for photographs of marginalized people—dwarfs, giants, transgender people, nudists, circus performers – and others whose normality was perceived by the general populace as ugly or surreal.

Day two from the RNC – National Consumers League

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SG_HEADSHOT.jpgThe buzz at the breakfast event on St. Clair today was all about the plagiarized sections of Melania Trump’s speech and how in the world that could have happened. At my morning event sponsored by The Atlantic Magazine, I sat next to a theater professor from a Maryland college who is spending her sabbatical studying the theatricality of the campaign. She regularly vets student papers for plagiarism through commonly used websites. Oops-guess the Trump campaign forgot to undertake that simple task.

What most of America doesn’t know is that conventions are a big party for a week. It was beautiful to be outdoors; in the low 80s, perfect for walking around and people watching. Though you need credentials to get into the actual convention site-in Cleveland it’s where LeBron James and the Cleveland Cavaliers just a few weeks ago won the national championship-the Quicken Arena–but a lot of what goes on is outside the official venue.

Cities hosting conventions have their venues booked out for months and hotels are all full, Airbnb’s are charging $700 for closet-sized rooms, and a city like Cleveland, on the upswing, provides endless entertainment at bars, restaurants, media outlets this week. All the big events are within a mile of each other and this is proving to be a very walkable city. I palled around with two friends from event to event.

One scary site: The Ohio Minutemen, draped by automatic weapons, a phalanx of six white men with patches on their jackets identifying who they are. I asked one member what they stand for. He mumbled, “Just defending the Constitution, Ma’am.” 

Then there’s the ubiquitous misogynist slogans on buttons, T-shirts and signs directed at Hillary Clinton; they are too crude to pass along but you can imagine the fear the first woman endorsed by a major party running for President instills.

I attended The Atlantic event with Ron Brownstein, moderating a discussion about how Donald Trump can turn the electoral map in his favor.  It’s a challenge–how does he get the Rust Belt white male votes and also appeal to the Millennials in purple swing states like Arizona, Colorado, and Nevada. I learned later from commentators that Republicans don’t think they have much of a chance with Millennials, who are looking for a more positive message that is far more inclusive.

T-shirts and bobbleheads for sale, music and entertainment on the streets. We walked down West Fourth today where MSNBC is based and Chuck Todd doing a live interview as we walked by. The Washington Post has staked out its temporary headquarters and the women of CodePink were there in their pink braziers and skirts with signs reading “Bust Up Militarism” and “Women Say Disarm Disarm.”

I attended a luncheon sponsored by Pfizer on the global benefits of fighting polio with a panel of experts. Two members of Congress, Tom Emmer (R-MN) and Phil Roe (R-TN), a doctor, both spoke in support of international funding for eradicating polio and a goal of vaccinating every child on the planet. I was disappointed that Rep. Emmer gave credence to the vaccine naysayers; he did implore us to listen to the families with autistic children who are convinced there’s a link to vaccinations but thankfully Dr. Roe emphasized that the “science just isn’t there” to support the link. 

Corporations and nonprofits–Atlantic Monthly and Center for American Progress for example–both held excellent and substantive panel discussions throughout the day. Receptions and cocktail parties abound, many in the most picturesque Cleveland sites: Rock and Roll Hall of Fame where I was last night is on what has become gorgeous Lake Erie, tonight Proctor & Gamble and Roll Call newspaper booked the old Powerhouse in the Flats area right off downtown–a charming site on the Cuyahoga River where boat rowing crews glided by. The P&G panel featured elected Republican women discussing how to get more of their colleagues elected to political office. I enjoyed talking to nuns on the Bus, a progressive group of sisters who lobby for social change and came at the invitation of Roll Call.

I had the chance to spend time with two Republican officials NCL works closely with, Commissioner Maureen Ohlhausen of the FTC, who is a thoughtful and insightful pro-consumer member of the Commission, and former FTC Chairwoman Debbie Majoras who hosted the P&G event tonight and who is a strong advocate for electing women of whatever stripe to political office. She also grasps the importance of her company being consumer-focused. 

Tonight as I watch speakers like Trump’s daughter Tiffany, Governor Chris Christie, and Speaker of the House Paul Ryan addressing the delegates, I’m glad to say I’m here soaking up the flavor of the Republican convention at the most unpredictable and unfathomable Presidential election in modern history. 

 

[1] Apparently, though I‘ve never tried it, you can put in a section of a speech and Google will tell you whether it’s from some other famous passage or talk. “Grammarly” is a website that is an automated proofreader and plagiarism checks. The problem was, Melania said she wrote the speech herself. But when it turned out much of it was lifted was Michelle Obama’s convention speech from 2008, she said someone else wrote it.

[1] CNN has the passages side by side and highlighted in yellow. Sections of Michelle’s and Melania’s speech appear word for word: https://www.cnn.com/2016/07/19/politics/melania-trump-michelle-obama-speech/

 

Day one from the RNC – National Consumers League

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Here I am in Cleveland, the host city of the Republican National Convention. I ended my day at the Rock and Roll Hall of Fame, a must-see American museum icon with gorgeous views of this beautiful city on Lake Erie. Cleveland is an unlikely host city for the RNC; it remains a stronghold of democratic activism:

Yet the RNC is in Cleveland because Ohio is a swing state in electoral politics, and Cleveland’s political leaders—many of them Democrats—fought hard to bring the money and luster of the convention to their city. But so many Republican stalwarts are missing; no Bush family members, no Gov. John Kasich speaking.

But today, the first of the convention, was filled with tension. There were police from every corner of America; I saw their badges and I asked them about being in Cleveland. It’s hot today—88 degrees. They are weighed down head to toe with walkie talkies, guns in holsters, and all sorts of other equipment. I feel for them and admire their willingness to be here.

From Kansas to California law enforcement, they said they were recruited nationwide to ensure there was no shortage of protection for delegates and visitors. They told me there were police from 140 places. I expected to see a vivid array of firearms, but was relieved that there were no civilians carrying guns. I walked over to St. Clair Street before noon; a 20 something kid with a ragged beard and a sign “GOP=Same Old Klan” directed me. The protestors marched with #BlackLivesMatter and Socialism signs peacefully and were accompanied by at least 150 police on bicycles. But the crowd was small; I think that many people stayed home.

Starbucks was full of reporters using the free Wifi to file stories before rushing to their next assignment.

Walking around town was a mixed bag. Many locals are selling Donald Trump tshirts and buttons, spouting sexist insults directed at the first woman nominated by a major party in America. I guess they can’t resist using the B word and worse. I felt anger welling up at the kind of misogynist slogans aimed.

Ohio Sen. Rob Portman welcomed two former VP hopefuls—Newt Gingrich and Sen. Joni Ernst—at a speech at Cuyahoga Community College, in support of Sen. Portman. I was pleased that Sen. Ernst talked about passing legislation against human trafficking, something NCL cares about deeply.

The Rock and Roll Hall of Fame featured an excellent session on data security and privacy with Republican FTC Commissioner Maureen Ohlhausen, who is especially articulate on these issues.

I worried about getting around, but it’s not too bad. I saw no taxis, but Ubers and Lyfts abound. I got rides within five minutes of my call, and we worked around the traffic with little difficulty.

I’ll be at the RNC every day posting my observations. Hope today’s smooth sailing continues through the week!

Different perspectives on the controversial soda tax – National Consumers League

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soda_tax.jpgBy Maureen Chircop, NCL Intern

In 2012, Mayor Michael Bloomberg of New York proposed a tax on sweetened beverages that the New York Court of Appeals struck down. Despite the soda tax’s failure, Mayor Bloomberg believed the tax would improve public health. On June 16, 2016, Philadelphia passed a soda tax bill. Instead of focusing on public health benefits, Philadelphia Mayor Jim Kenney concentrated on the community benefits of the soda tax, which amounts to an extra 1.5 cent on each ounce of soda sold.

Mayor Kenney predicts about $90 million in revenue will be generated by the end of next year. This money will be reinvested into community programs such as universal pre-k, community schools, and recreation centers. Not only do taxes on unhealthy habits work to promote positive public health benefits, but utilizing taxes to fund community programs are good for communities and should be encouraged.

For example, a previous tax that promoted positive public benefits is the federal cigarette tax that was passed in 2009. The law aimed to deter smoking by taxing cigarettes. An article from Fortune states that statistics show a decline in smoking occurs when tobacco taxes are present. The same article explains that “…tobacco taxes and consumption are strongly inversely related.” As the price of cigarettes increased, study after study has shown that smoking numbers have gone down. Therefore, it wouldn’t be surprising that a soda tax can garner similar results.

Opposing the tax, the American Beverage Association (ABA) believes that the positive health benefits are *false. The ABA believes that the decline in soda consumption does not result in the decline of obesity. Although not all studies are complete because of the relative novelty of the tax, there are some promising trends. Studies do find a reduction in consumption of sugary beverages as their prices rise. According to a National Institute of Health (NIH) article, a 10 percent tax increase on soda has led to a 8 percent average decrease in consumption.

Despite the evident health benefits, those who oppose the soda tax say it may impact low income families more than middle class individuals. Even though this may be true, low income families reap the most benefits from a soda tax. The New England Journal of Medicine states that, “[H]igher taxes are particularly effective in poorer…groups,” which means that lower income individuals thus have a stronger incentive to curb their soda appetite. In addition, the health benefits are progressive for them.

A related tax that is creating positive public health benefits is the “junk food” tax in Mexico. The tax on junk foods in Mexico includes soda, of which Mexico has the fourth highest consumption rate. Despite contributing factors such as unemployment, marketing strategies, and other minor factors, overall soda consumption went down 12 percent over a year in Mexico.

Improved health is only one of the benefit of the soda tax. The tax can also produce much-sought-after funds for communities. For instance, in Mexico, the “junk food” tax raises $150,000 per month to orchestrate community initiatives to improve the health of the community. Similar to Mexico, Philadelphia politicians want to steer the funds to low-income communities for critical programs such as universal pre-k.

Critics that deny a correlation between taxes and health benefits are not looking at the tax through the correct lens. Yes, a soda tax may produce minimal health benefits, but there are still tangible health effects. Despite critics’ notion that a soda tax may not greatly reduce obesity rates, the revenue garnered from the tax will provide much needed community programs and initiatives that are extremely beneficial to lower income communities. In addition, a soda tax will reap fundamental revenue to invest in future generations of citizens.

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

National Consumers League statement on FTC’s settlement with Herbalife – National Consumers League

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July 15, 2016

Contact: NCL Communications, Cindy Hoang, cindyh@nclnet.org, (202) 207-2832

Washington, DC—The National Consumers League (NCL) today welcomed the Federal Trade Commission’s (FTC) action to require fundamental restructuring and significant consumer redress as part of its settlement with multi-level marketing company Herbalife. In March 2013, NCL was the first consumer group to call on the Commission to investigate allegations that Herbalife was engaging in a sophisticated pyramid scheme. In March 2014, the FTC responded to calls from NCL and others by opening an investigation into the company’s conduct.

The following statement is attributable to NCL Executive Director, Sally Greenberg:

“The FTC’s action today addresses many of the concerns that NCL and other experts on pyramid schemes raised about Herbalife’s business practices. Specifically, consumers will benefit greatly from the settlement’s requirement that Herbalife base its compensation structure on verifiable retail sales to end-users of the product, not recruitment of new distributors. This is the core distinction, as enumerated by more than 30 years of case law, between a legal direct-selling company and a fraudulent pyramid scheme. The settlement’s requirement that at least 80 percent of product sales, companywide, must be made to end-users will further address concerns about a lack of retail sales to buyers outside the business opportunity. The FTC’s settlement will also address many of the blatantly unsubstantiated earning claims made by Herbalife’s distributors to entice new recruits to join the business opportunity and keep existing distributors paying to remain in the business opportunity. We look forward to the FTC’s forthcoming guidance to the direct selling industry as an opportunity to address the persistent lack of clarity that has characterized many industry practices.”

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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.

NCL statement on House Energy and Commerce Committee votes on H.R. 5104 and H.R. 5111 – National Consumers League

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July 14, 2016

Contact: NCL Communications, Cindy Hoang, cindyh@nclnet.org, (202) 207-2832

Washington, DC—The National Consumers League (NCL), America’s pioneering consumer and worker advocacy organization, today released statements regarding the passage of two consumer-focused bills in the Energy and Commerce Committee of the U.S. House of Representatives.

NCL applauds the House Energy and Commerce committee’s passage of H.R. 5104, the Better On-line Ticket Sales (BOTS) Act of 2016, an excellent first step forward toward the goal of promoting a fair live event ticketing marketplace.

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

“The bipartisan BOTS Act represents an important first step in promoting a fair ticketing marketplace for all consumers. Prohibiting the use of ticket bots to electronically ‘jump the line,’ ahead of consumers patiently waiting to purchase tickets will help promote a fair live event ticketing marketplace for consumers. Although this bill’s passage is a significant win for consumers, this bill also represents a missed opportunity to protect consumers from unethical ticketing practices. Prohibiting bot usage alone as the BOTS Act proposes, only fixes part of the problem. To put more tickets in the hands of everyday fans at a fair price, the live event ticket market needs additional transparency to require disclosure of how many tickets actually go to general sale as well as greater consumer protections to help empower fans to make better purchasing decisions.”

NCL applauds the Commerce Committee’s bipartisan passage of H.R. 5111, the Consumer Review Fairness Act. H.R. 5111 will protect consumers’ First Amendment right to provide honest reviews of products and services without fear of legal retribution from merchants who hide behind non-disparagement clauses in their terms of service agreements.

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

“Consumers rely on honest product reviews to make many important purchasing decisions. Unfortunately, some merchants and vendors want to remove this quintessential American right of  free expression by inserting so called “non-disparagement” clauses that threaten legal action against consumers who post negative reviews  H.R. 5111 would nullify these ‘terms of service’ rules aimed at silencing honest feedback, allowing consumers to benefit from accurate reviews. NCL welcomes these protections.“

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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.