Federal government shutdown a boon to scammers

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With the partial government shutdown about to enter Day 27, there is no shortage of stories about the shutdown’s impact on everyday citizens. With the shutdown hurting millions of Americans and costing the economy billions of dollars, one group is undoubtedly rooting for the shutdown to go on as long as possible: scammers.

That is because one of the agencies currently shut down is the Federal Trade Commission (FTC), which is one of the government’s biggest cops on the beat against scam artists. In 2017, almost a quarter million consumers reported to the FTC that they lost nearly $1 billion to scammers. While those are certainly big numbers, we know that fraud is a historically underreported crime, so those losses are likely only the tip of the iceberg. 

Screenshot of the FTC's website with and alert showing that it is shutdown.

The FTC relies greatly on consumer complaints to drive its investigations. In 2017, the Commission collected 2.7 million such complaints, giving it the evidence it needed to take down scams of all kinds, from phony debt collectors, to identity thieves, to imposter scams to dozens of other types of cons. Unfortunately, for the past 27 days, the agency has been unable to accept complaints from consumers. That means that for the past 3+ weeks, scammers have been free to defraud Americans without having to worry about getting caught by the FTC. 

Consumers can file their complaints with other organizations, though none of them have the resources or investigative reach of the FTC. For example, state attorneys general typically take fraud complaints, but their investigative reach is often constrained by limited resources and they may lack expertise on the types of fraud that the FTC has investigated for decades. There are also a number of great nonprofit organizations, including the Identity Theft Resource Center, AARP’s Fraud Watch, and NCL’s own Fraud.org that collect complaints and provide counseling to fraud victims. For Fraud.org’s reports, we also typically amplify our impact by sharing our complaints with the FTC, which can and does investigate. With the FTC shut down, that information isn’t currently happening. 

With the FTC absent, scam artists’ jobs are made much easier. The plight of hundreds of thousands of furloughed federal workers – many living paycheck–to–paycheck – is rightfully getting plenty of attention. However, Congress, the White House, and the media should not ignore the millions of consumers who are being put at greater risk of fraud while the government remains shuttered. 

Texas v. United States – How consumers can protect themselves amid threats to the Affordable Care Act

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Nissa ShaffiLast week a federal judge in Texas, Justice Reed O’Connor, ruled that the Affordable Care Act (ACA) is unconstitutional. The case against the ACA is being led by Texas Attorney General Ken Paxton on behalf of a group of 18 Republican state attorneys general, two governors, and two individual plaintiffs.

The lawsuit argues that because the individual mandate penalty has been repealed (effective 2019), it would render the entire ACA invalid, as the entirety of the law relies on the mandate. The lawsuit makes the claim that the absence of an individual mandate penalty would mean that the entire ACA would be unconstitutional.

While this news is disheartening, it is important for consumers to know that the ACA is still the law of the land. The ruling is currently at the federal district court level and is going to be appealed, led by California Attorney General Xavier Becerra, representing a group of 17 attorneys general in other states. Attorney General Becerra described the ruling as an “assault on 133 million Americans with preexisting conditions and the 20 million Americans who rely on the ACA’s consumer protections for healthcare.”

Although the federal deadline for open enrollment has passed, there are some states that have their own individual exchanges, with extended open enrollment deadlines:

NCL encourages residents of these states who are not enrolled in a marketplace plan to take advantage of these extended deadlines. You can also see if you qualify for a Special Enrollment Period, which allows individuals to sign up for health insurance outside of the Open Enrollment Period if they have had changes in certain life events. If you qualify for Medicaid or the Children’s Health Insurance Program (CHIP), you can apply at any time.

So take heart consumers. NCL believes strongly that this ruling–which comes from a right-wing Texas judge–is overbroad and will be reversed on appeal.

America’s consumers left out of latest Dieselgate compensation

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When Americans hear “Dieselgate,” they often think of Volkswagen. That’s because the automaker was investigated and sued by the U.S. government and consumers for installing emissions-cheating software in its diesel cars. The cost to VW for these actions could soon top $35 billion, globally – including $25 billion extracted by U.S. authorities in fines, penalties, civil damages, and restitution. But American consumers are still awaiting compensation for similar emissions cheating by other automakers.

Daimler-owned Mercedes Benz, BMW, GM, Renault, and FIAT are all accused of duping customers into thinking they were buying environmentally-friendly diesels that, in reality, were breaking air pollution laws. While the automakers haven’t yet faced consequences in the United States, European authorities are protecting their countries’ consumers by holding the companies to account. The European Union is investigating Daimler, BMW, and VW for colluding to limit clean emissions technologies, and countries like Switzerland have banned diesel models from Mercedes and Porsche.

German authorities launched an investigation into Daimler in March last year for suspected diesel emissions fraud. Two months later, state authorities raided Daimler’s headquarters and other sites around the country, confiscating files and computer drives. In June this year, the German transport ministry ordered Mercedes to recall up to 774,000 cars across Europe after tests found they manipulated diesel exhaust emissions.

In October this year, carmakers began to announce concessions. Daimler said it would offer major exchange incentives to its German customers of up to 10,000 euros (US$11,564) to swap out old diesel vehicle models with “more advanced exhaust gas treatment technology and substantially lower emissions.” Daimler also said it will participate in a federal hardware retrofit program paid for on its own dime. Meanwhile, Volkswagen also offered new incentives of up to 10,000 euros, including on several of its Audi models, and Renault became the first non-German car company in the country to offer similar trade-in perks.

If German customers are receiving thousands of dollars in compensation, shouldn’t American customers be receiving something too?

The answer might rest on differing levels of crackdown. Daimler is being investigated over its emissions systems by the Department of Justice, the Environmental Protection Agency, California Air Resource Board, the U.S. Securities and Exchange Commission, and other federal and state authorities, but the U.S. government has yet to take any public action. In February this year, Senators Ed Markey (D-MA) and Richard Blumenthal (D-CT) – each of whom NCL has honored with our highest consumer protection award over the years – called on the Justice Department to take appropriate action against Mercedes. After all, in the United States, there are estimated to be up to hundreds of thousands of Mercedes diesels that could be polluting up to 91 times the legal standard.

Earlier this month, the White House met with the CEOs of Daimler, Volkswagen, and BMW, including a face-to-face with President Trump. Unsurprisingly, there was no mention of the diesel emissions cheating or the ongoing investigations involving Daimler. If this Administration doesn’t take action against emissions cheaters, it will be up to legislators, the courts, and citizens to hold them accountable. German pressure helped secure buy-backs and retrofits for German consumers; American consumers also deserve to be compensated.

Abrupt campus closures of major for-profit college exemplifies flaws

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Tucked into the back page of the Washington Post last week was a report about the abrupt closure of another for-profit college chain, the Education Corporation of America (ECA). Virginia College and Brightwood College of Maryland announced they would shut down quickly – affecting 20,000 students at 75 campuses – and ECA says it’s on the brink of insolvency.

 

In a statement on Thursday, Brian Frosh, attorney general of Maryland, said this closure without advance notice or planning demonstrates how poorly equipped for-profit colleges are to provide a quality education to students and plan for stormy financial weather.

Now Maryland officials are scrambling to work with ECA to help its students transfer credits or have their loans forgiven.

NCL has written about the poor record of for-profit colleges – their high default rates, low graduation rates, targeting of low-income and students of color, and dependence on students’ taking out expensive federal loans with dubious employment options after getting a degree, if they even do get a degree.

In closing its doors, ECA complained that the Obama Administration had stripped its accreditor – the Accrediting Council for Independent Colleges and Schools (ACICS) – of the power to participate in the federal student aid program, which is easy money for these low-quality for-profit schools. ECA filed suit against the Department of Education as a result.

But what the ECA suit does not say about ACICS is how the accreditation agency had taken its own action against Virginia College over its concerns.

In a letter, ACICS told ECA’s Virginia College, “The Council has reviewed your recently submitted 2017 Campus Accountability Report (CAR) for the Macon, GA, campus, and the campus-level placement rate of 16% is materially below the Council standard of 60%.”

When your own accreditation agency says you’re failing to meet basic standards, then that’s not really the Department of Education’s fault.

Under Education Secretary Betsy DeVos, for-profit colleges have had a reprieve, but apparently not enough to save the likes of ECA from going under. Without the pipeline of federal loan money going to ECA via students taking out those loans, their enrollment has dropped, along with their reputation. We agree with Maryland AG Frosh, who said, “The continuing harm to students of for-profit colleges shows the need for the Department of Education to change course and start protecting students.”

Will Congress stand by after another mega-breach? 

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Once again, consumers are faced with the news of a data breach affecting millions of Americans. This time, it was Marriott Hotels, the parent company of brands like Starwood, Westin, Sheraton, W, and the eponymous Marriott. Every breach is bad, but this one looks particularly so. Marriott has acknowledged that information belonging to up to 500 million hotel guests’ data may have been exposed.

Thus far, Marriott has issued a statement revealing that an “unauthorized party” copied and encrypted information, which included personal data such as “people’s names, addresses, phone numbers, email addresses, passport numbers, dates of birth, gender, Starwood loyalty program account information, and reservation information.” In short, the crooks got away with everything they would need to defraud millions of consumers. 

Especially galling, it appears that the hackers had access to Marriott’s system as far back as 2014 until the company detected the problem on September 8, 2018. This would mean that Marriott neglected to disclose the hack to the public for almost two months. Numerous lawsuits have been filed against Marriott. Plaintiffs from Oregon to Maryland have claimed that Marriott was negligent in its poor management of their customers’ personal information and consequently exposing them to identity fraud. This cyberattack has surfaced as the second worst recorded data breach behind Yahoo’s 3 billion–account hack in 2013.  

As 2018 comes to an end, the rise of attacks have become more and more unsettling. For example, earlier this year Uber settled its hack and subsequent cover–up for $148 million. When the history of the Internet is written, data breaches will undoubtedly be cited as a key reason for consumers’ declining trust in companies that collect their data.  

Privacy advocates have called for stronger regulation of the companies that handle massive amounts of their users’ information. Despite the growing frustration surrounding consumer privacy, Congress has failed to seriously introduce, let alone pass, a federal consumer privacy bill. With the growing attention towards cyber hacks, Congress must make passing a federal consumer privacy bill that holds companies more accountable a top priority. There should be real penalties for those who handle their users’ information irresponsibly.  

This frustrating status quo may be changing, however. Senator Ron Wyden (D-OR) has drafted his own “Consumer Data Protection Act,” which is the first to propose jail time for business executives that negligently or intentionally fail to disclose cyberattacks. Although the bill contains some strong protections such as regulatory authority for the Federal Trade Commission, many believe it will not gain the necessary traction to pass both houses of Congress. Other bills, such as Intel’s privacy act discussion draft, also contains some much-needed protections. As it prepares to open a new session in January, Congress must address these massive data breaches and push for comprehensive legislation that will protect Americans. 

George H. W. Bush tribute on the ADA – National Consumers League

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As we pay our final respects to him, we can credit President George Herbert Walker Bush with one noteworthy accomplishment, and that is championing the cause of disability rights and signing into law the truly remarkable and life–changing bill, the Americans with Disabilities Act (ADA). 

I’d forgotten his critical role in this bipartisan legislation until a recent visit to the U.S. Presidents wing at the National Portrait Gallery. What caught my attention was an extraordinary clip from his speech at the ADA bill signing on July 26, 1990.

For the first time, federal legislation addressed the desperately needed protections and rights for people with disabilities; even those with temporary disabilities. The ADA extended a broad array of rights, with titles covering equal access to employment, public accommodation, public transportation, telecommunications, service animals, and so much more.   

The bill, drafted by the Equal Employment Opportunity Commission, included a list of conditions that would be concluded to be disabilities: deafness, blindness, an intellectual disability (formerly termed mental retardation), partially or completely missing limbs or mobility impairments requiring the use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, Human Immunodeficiency Virus (HIV) infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia. 

The ADA states that a “covered entity” shall not discriminate against “a qualified individual with a disability.” Prohibited discrimination included firing or refusing to hire someone based on a real or perceived disability, segregation, and harassment based on a disability. Covered entities are also required to provide reasonable accommodations to job applicants and employees with disabilities. 

This watershed legislation has been a lifeline to the 60 million or more Americans who are included as having disabilities. NCL met with Helena Berger, president of the American Association of People with Disabilities, last week. She reaffirmed the singular importance of the ADA in the lives of Americans with disabilities and queried whether in today’s environment we could have gotten the ADA enacted. All the more reason why we should thank and pay final tribute to President George H.W. Bush, who served with distinction as U.S. Ambassador, CIA director, Vice President, and then President of the United States. We all owe him a debt of gratitude for shepherding through and signing this landmark legislation and, most importantly, for championing the rights of people with disabilities through this critical law. 

Facebook’s breach is news, but Congress’ lack of action on data security is the bigger story

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Last week, Facebook announced that they suffered a data breach affecting a reported 50 million users. Coming just over a year to the date from an even larger data breach at Equifax, which affected 146 million consumers, we have to ask: Why is Congress continuing to dither on data security legislation that NCL and others have long called for?

Given Facebook’s high profile and the fallout from the earlier Cambridge Analytica scandal, it’s unsurprising that a breach there would generate headlines. At this point, however, there seem to be more unknowns than knowns when it comes to Facebook’s breach. Statements from Facebook officials have acknowledged that the attack initiated in July 2017. To their credit, executives at Facebook were quick to notify the public after they discovered the breach last week.

Although many, if not most of the facts about the breach are yet to be released, Facebook has stated that the attackers took advantage of three separate, but related vulnerabilities to compromise user “access tokens,” allowing the attackers to take over users’ Facebook profiles.

Many security professionals were concerned that the compromised access tokens might be used to log in to third-party services using the “Login with Facebook” tool that many users are probably familiar with. Fortunately, Facebook recently posted in their newsroom that they have yet to find any evidence that the attackers hacked third-party accounts linked to Facebook log-ins.

In terms of cleanup, Facebook has said that they have fixed the vulnerabilities that attackers utilized and have reset users’ profiles to further secure users’ information. Additionally, Facebook stated that they are establishing tools for developers to manually identify breached accounts and subsequently log them out for security purposes. Despite these steps taken, some are calling for a regulatory fine. Considering the E.U.’s recent General Data Protection Regulation (GDPR), some are speculating that this will be the first data breach under the new regulation. While Facebook notified the Irish DPC of the breach within 72 hours of finding out, the social media titan has to show that they took appropriate steps in protecting user data.

Admittedly, the facts of the Facebook data breach are still coming in; however, one fact is clear: companies like Facebook, Equifax, and the countless other businesses profit by collecting consumers’ data on a massive scale. The collection and use of such huge amounts of personal data creates an inescapable risk to consumers that the data will fall into the wrong hands. That is why comprehensive data security legislation is so urgently needed.

Many of the components of an effective data security bill already exist in state laws in places like California and in the European General Data Protection Regulation. These regulations should be viewed as benchmarks for how companies’ data security practices should be regulated. NCL has endorsed legislation like Senator Patrick Leahy’s Consumer Privacy Protection Act. The Leahy bill not only protects broad categories of data, but it also refrains from preempting stronger state laws that already exist.

The Internet became the phenomenal engine for growth and innovation it is because users felt comfortable sharing their information online. Every time a data breach occurs, the basic trust that created that success is eroded. The only question that remains, will Congress wait until there is no trust left to act? Or will our elected leaders only take real action when it’s too late?

Asbestos in America: New use could bring new problems

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Mesothelioma is a rare cancer that affects the lining of the lungs, heart, and abdomen. More than 50,000 people have died from this disease and other asbestos-related conditions in the last decade, and about 3,000 new cases are diagnosed each year. To date, there is no known cure. Yet the Trump Administration is seeking to loosen asbestos regulations, despite the recent resurgence of asbestos exposure cases in the United States.

The most common type of mesothelioma (pleural) develops in the chest cavity and lungs and accounts for 85 percent of cases. Though asbestos is not immediately harmful when it is undisturbed, if an asbestos-containing material is broken, microscopic asbestos fibers can be released into the air. When inhaled, these fibers can become stuck in the lining of the lungs, creating scar tissue and leading to the development of mesothelioma tumors.

Asbestos is currently banned in 60+ countries, but it is still legal in the United States. Though regulations exist, and we are no longer exposed through items like fake snow or crock pots, regulations are not strict enough to stop all use or importation of goods containing asbestos. In fact, any material that contains less than one percent asbestos is not formally considered an “asbestos-containing material” by the Environmental Protection Agency. However, studies have shown that even small levels of asbestos exposure can be dangerous and may lead to life-threatening illnesses.  

Into this mix comes the Trump Administration’s EPA rules. On June 1 of this year, the EPA published a proposed regulation, the “Significant New Use Rule” (SNUR), which would loosen restrictions on certain chemicals, including asbestos. Those restrictions are written into the Frank R. Lautenberg Chemical Safety for the 21st Century Act, which President Obama signed in 2016 as an amendment to the Toxic Substances Control Act of 1976 (TSCA). The law made significant changes to how the EPA regulates chemicals in the U.S.

Pursuant to the law, on December 19, 2016, the EPA published a list of 10 chemicals it would evaluate to comply with the Lautenberg Act. As noted above, the list included asbestos. The SNUR, however, could make it possible to introduce new uses of asbestos. This is bad policy.

Mesothelioma and asbestos-related disease cases are increasing in age groups not typically associated with asbestos exposure. This is due in part to what scientists and medical professionals are calling a “third wave” of asbestos exposure which results from damaging asbestos that is already in place or coming into contact with contaminated products. Instances like this summer’s pipe burst in New York City are prime examples. The use of asbestos in older pipes and fittings continues to pose threats. In addition, asbestos also lurks at home and can be unexpectedly released during renovations.

In our view, the SNUR that EPA is proposing is dangerous. Asbestos exposure has been linked to illnesses and aggressive diseases like mesothelioma since the early 20th Century. Asbestos has historically been associated with industrial jobs like mining, manufacturing, construction, and shipbuilding, but asbestos could also be found in more than 3,000 consumer products when it was at the height of its use between 1930 and 1970. It is also the only known cause of mesothelioma which is a dangerous disease: prognosis and the life expectancy of patients usually range between one and two years. We should be working to reduce exposure to asbestos in every way possible, not loosen regulations allowing greater exposure.

NCL applauds groups such as the Mesothelioma + Asbestos Awareness Center that are working to fight the easing of restrictions on asbestos. The Trump EPA’s attack on health and safety regulations that are intended to reduce illness and disease is unwise. We hope voices of reason will prevail and result in pressure on the EPA to rescind the SNUR.

A Senator John McCain remembrance – National Consumers League

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Washington is a funny place. Ordinary people ­–congressional staffers, lobbyists, or in my case, public interest lawyers­– often find themselves mingling with very prominent, famous people at receptions, cocktail parties, testifying at hearings, attending press conferences, or walking down the halls of the Russell Senate office building. It was on several of those occasions that I saw Senator John McCain in action.

In the 1990s, Senator McCain chaired the Senate Energy and Commerce Committee. For many consumer advocates, this is the most important body because it oversees the work of the consumer protection agencies like the Federal Trade Commission, the National Highway Traffic Safety Commission, the Consumer Product Safety Commission, and the Federal Communications Commission. I was a lobbyist at the time for Consumer Reports, charged with improving product and auto safety. It was a constant battle to get the auto industry to accept safety as one of its mandates and to make cars safer for the traveling public.

Senator McCain, while chair of the committee, unlike so many of his Republican counterparts, admired my fellow consumer advocates and said so. He called my boss Gene Kimmelman, who was director of Consumers Union in Washington and an expert in antitrust and telecom, “a remarkable young man.” He praised Joan Claybrook, head of Public Citizen and instructed his staff to work with consumer advocates on auto safety measures.  I sat through hearings where he excoriated the auto industry witnesses for putting cars on the market with obvious safety defects and for their history of opposing safety measures, as he noted, “including seat belts and airbags.”

He wasn’t always supportive of consumer rights. The Senator had a conservative voting record and opposed a lot of consumer initiatives; for example, in 2001 we successfully defeated the nomination of Mary Sheila Gall for chair of the Consumer Product Safety Commission. She was wholly unfit for the job, blaming “negligent” parents instead of manufacturers when a product injured or killed a child. McCain was very angry about her defeat. But what made the Senator different is that he wasn’t single-minded,  marching to the beat of the industry mantra that any regulation is bad regulation, and was actually willing to take them on publicly.

As luck would have it, one day some years ago I found myself waiting for a taxi after a Washington event. Standing next to me happened to be Senator McCain with his mother in tow. She was youthful and full of spunk. He introduced us. We started chatting and, although I can’t remember details, it was like talking to the guy at the dry cleaner or the grocery store. We had a laugh; I remember him as fun and friendly. Then he and his mom got into the car and sped off. I came home and told my son I had just spent a few minutes chatting with John McCain. He didn’t believe me. After the Senator ran for President and lost, I’d see him in the halls of the Russell Senate Office Building ,and I always said hello and thanked him for his service and for his integrity.

Senator McCain continued to fight for his beliefs up until the last possible moment. He was a prisoner of war for five years and suffered torture and beatings, but maintained his dignity and strength until his release and always said he liked and admired the Vietnamese people. He served in the House and Senate and ran for President twice. He had a kind of integrity that is in short supply today. For instance, he once told a lady at one of his campaign stops in Minnesota that she was wrong, Senator Barack Obama wasn’t an Arab and was a “decent man and a family man.” He was one of the few—and most importantly, decisive votes—to oppose killing the Affordable Care Act. He called out President Donald Trump time and again, at great risk to losing his Republican base, while most of Senator McCain’s Republican colleagues remained silent. The country has lost a brave and important voice, and we should all mourn his passing.

How tariffs hit home for low-income consumers – National Consumers League

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Earlier this year, I examined how 25 percent tariffs on a range of Chinese goods would impact smartphone users, particularly low-income consumers who rely on their phones as their primary means of Internet access. As new data comes out about the impact of tariffs, it’s becoming clearer that these tariffs will hit low-income consumers particularly hard.

To illustrate this point, let’s look at the humble thermostat. If you grow up living through Virginia summers like I did, you quickly learn what a potent combination heat and humidity can be. Stepping out of that sticky mess into a cool home makes you appreciate what a marvel modern air conditioning can be. While many of us take heating and air conditioning for granted, for millions of low-income consumers, home energy costs eat up a big chunk of their budgets.

It’s for this reason that home energy waste can be such a problem. A surprising amount of money is wasted because homes are heated and cooled in an inefficient manner. Think of all those hours you pay to heat and cool an empty home while you’re at work and the kids are at school. While middle- and upper-income households may spend as little as 1 to 5 percent of their incomes on heating and cooling, it is estimated that low-income consumers often spend anywhere from 10 to 35 percent of their incomes home energy bill. For consumers whose budgets are already stretched thin, wasting money on heating and cooling can make it even harder to make ends meet.

This is where the humble thermostat comes in. These relatively simple devices — turning on the heating and cooling when it’s needed, turning it off when it’s not — play a key role in regulating home energy costs. In recent years, technology companies have begun to market dozens of different “smart” thermostats to help make heating and cooling more efficient. Thanks to smart thermostats, consumers in Minnesota can return home to pre-warmed homes in the winter or turn up the heat remotely from work if their kids get sent home from school early due to an impending snow storm.

The savings can be significant, with smart thermostat makers like Nest and Honeywell claiming more than $100 in annual household savings. Smart thermostat prices running in the $150-200 and with many utility companies offering rebate programs, the upfront cost can get paid for in a relatively manageable amount of time.

According to International Trade Commission statistics, the majority of thermostats in the United States come from China. Hiking up the price of smart thermostats by 25 percent through tariffs makes it less likely that price-conscious consumers will be able to justify that up-front cost, leading to less efficient homes. It’s for this reason that tariffs on smart thermostats from China could have an especially negative impact–not just on household managers who are thinking of buying one, but even on those who don’t. The costs of energy waste hit everyone in the form of higher energy prices and the environmental impacts stemming from excess power generation to run all those air conditioners and HVAC systems.

While middle-and-upper income consumers may not feel this pinch, low-income consumers will. The indirect impacts of higher prices on thermostats is just one way that low-income consumers, in particular, are affected by tariffs. As President Trump considers slapping yet more tariffs on Chinese goods, these impacts should give the Administration pause and, hopefully, lead it to reconsider this harmful trade policy. Fortunately, the Administration recently announced that it is considering excluding certain products from tariff action. Let’s hope that it considers the effects that anti-trade policies will have on the most vulnerable and exclude thermostats from further tariffs.