FTC guidance to multi-level marketers highlights advocates’ priorities – National Consumers League

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January 9, 2018

Contact: Carol McKay, (202) 207-2831 or carolm@nclnet.org

Washington, DC – The National Consumers League (NCL) is pleased that the Federal Trade Commission’s (FTC) new guidance to the multi-level marketing (MLM) industry broadly reflects the priorities and concerns expressed by a broad coalition of advocacy organizations focused on fighting pyramid schemes. NCL also welcomed the Commission’s message that the benefit of relying on its existing authority under Section 5 of the FTC Act, as interpreted by decades of case law, rather than legislative action, is the best way to protect consumers from pyramid schemes. NCL, along with other national consumer advocacy and civil rights groups, pyramid scheme experts, and prominent direct selling companies, has opposed efforts by the MLM industry and its allies in Congress to weaken the FTC’s ability to investigate and prosecute pyramid schemes.

The following statement is attributable to John Breyault, National Consumers League Vice President, Public Policy, Telecommunications, and Fraud:

The FTC’s new guidance is consistent with existing case law and previous Commission guidance. In addition, it addresses topics such as income and product claim substantiation, internal consumption, and inventory loading that the MLM industry has frequently misinterpreted. Indeed, the guidance once again demonstrates that the FTC already has the tools it needs to do its job and protect consumers from pyramid schemes masquerading as legitimate MLMs.

Despite industry claims to the contrary, pending bills in Congress — H.R. 3409 and a House appropriations rider sponsored by Rep. John Moolenaar (R-MI) — would fundamentally weaken the FTC’s ability to hold MLMs accountable when they perpetrate fraud against prospective entrepreneurs. The Commission’s new guidance is clear and sound advice to the MLM industry about where the guardrails should be placed in order to avoid pyramidal behavior, and yet another indication that proposed legislation is unnecessary and, indeed, undermines the FTC’s authority.

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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.

DOT’s gift to the big three airlines is coal in passengers’ stockings – National Consumers League

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December 7, 2017

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

Washington, DC–The Department of Transportation (DOT) *today announced that it will abandon efforts to address rampant add-on fees that are major irritants for millions of consumers. By withdrawing two key rulemakings — the Notice of Proposed Rulemaking on Ancillary Airline Passenger Revenues and the Supplemental Notice of Proposed Rulemaking on Transparency of Airline Ancillary Service Fees — the DOT is signaling that it will allow airlines to continue taking money from consumers’ pockets and generating billions of dollars worth of add-on fees without any meaningful oversight.

The following statement is attributable to Sally Greenberg, Executive Director of the National Consumers League:

“The Big Three airlines just got an early Christmas present from the DOT and airline passengers got scrooged. The fees juggernaut driven by the legacy airlines that saddles consumers with add-on fees shows no sign of slowing. In 2017, the Big Three U.S. airlines — American, Delta, and United — collected more than *$11 billion dollars in ancillary revenue in the face of growing outrage by the flying public over this rampant nickel-and-diming.

Under the Obama Administration, at the urging of consumer advocates, the DOT began the long overdue process of examining the effect of these fees on the flying public and ways to ensure that airlines can’t hide these fees in fine print. Since 2010, these fees have increased by 13%. Because these fees are exempted from excise taxes, they are doubly lucrative for the airlines, costing taxpayers $309 million annually, according to the GAO.

The administration’s decision, a top priority of the industry, will lead to decreased competition, and add needless cost and confusion to consumer’s shopping experience. Simply requiring airlines to publish the full price of a ticket, including baggage fees, is not too much to ask. In its recent study, the GAO identified the differences in airlines’ a la carte systems, as pain points for consumers and a contributor to the rising cost of airline travel for consumers.

Today’s actions show that the risk of regulatory capture at the Trump DOT is very real. Congress must step in and take action to protect consumers through the passage of the *FAIR Fees Act, a bill that would ensure that ancillary fees are reasonable and proportional to the cost of providing a service.“

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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.

 

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

 

Consumer group objects to unlawful transition of power at CFPB – National Consumers League

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November 28, 2017

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

Washington, DC—The National Consumers League (NCL), the nation’s oldest consumer and worker advocacy organization, announced it support for the actions of former Consumer Financial Protection Bureau (CFPB) Director Richard Cordray appointing his Deputy at the Bureau, Leandra English, as acting head of the agency. Director Cordray stepped down from the Bureau on November 24. NCL is calling on President Trump to respect the leadership process outlined in the Dodd Frank Act for independent agencies such as CFPB, which he failed to do when he appointed Mick Mulvaney as acting director.

Congress, in drafting Dodd-Frank, set out to harmonize the law with the Federal Vacancies Reform Act, which states that its general provision for presidential appointment of an acting official without a Senate vote in the event of a vacancy does not apply to agencies where “a statutory provision … designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity.” The statutory delegation of leadership authority over the CFPB to the Deputy Director in the event of the Director’s absence is exactly what the statute’s drafters had in mind.

The following statement can be attributed to NCL’s Executive Director Sally Greenberg:  

The CFPB statute, created under the Dodd-Frank Act, specifically notes that the Director ‘shall appoint a deputy to run the agency if the director slot is vacant.’ It’s directive, not permissive language. We question President Trump’s direct and immediate designation of a new head of the agency without following the process for independent agencies. That process would include a nomination of an individual to lead the agency, followed by Senate hearings, followed by a vote in the Senate to confirm.

The CFPB, like the Federal Reserve Board Chair and its respective appointments, was designed to do its work free from Congressional pressure or special interests. The Bureau is a watchdog over financial sector abuses like payday lending, predatory student loan and debt collection policies, and the opening of phony bank accounts like the activities Wells Fargo engaged in.   

President Trump has circumvented appropriate procedure by naming Mick Mulvaney, his Office of Management and Budget Director, as the Acting Director of the CFPB. The move is an affront to CFPB independence and is constitutionally and procedurally wrong. The federal courts will need to rule on the interpretation of the statute.

Mick Mulvaney is the wrong choice for additional reasons, as well. He is already serving as head of the Office of Management and Budget. He is on record as having said the Bureau, which has returned $12 billion to 29 million American consumers, is a “sad, sick joke” and that he wants to see it abolished. He is a threat to the CFPB’s track record as an independent agency working on behalf of consumers. Consumers would be seriously harmed by Mulvaney, who is not an independent actor and lacks any record of supporting consumer 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.

Practice safe shopping this Black Friday, Cyber Monday and holiday season

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November 22, 2017

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

Washington, DC–As families prepare for their annual Thanksgiving traditions, many, too, are getting ready to put their credit cards and hard-earned cash to work this Black Friday (or even earlier at some retailers). While “Cyber Monday” used to be considered the biggest online shopping day of the year, the holiday shopping rush seems to start earlier and earlier each year. With more and more consumers opting to avoid the mall, online spending over the Thanksgiving weekend through Cyber Monday is expected to be in the billions.

Forbes reported last month that this holiday shopping season is expected to be “robust.” Whether consumers do their shopping online at the workplace or at home, advocates are reminding them to practice safe e-shopping habits in the coming weeks and year-round.

“The Internet can make your shopping faster and easier, but there can also be pitfalls if you’re not careful,” said Sally Greenberg, executive director of the National Consumers League, which today released its top ten tips for avoiding cyber grinches and scams this holiday season. “There are ways to ensure you have a safe online shopping experience, so that gift-giving is a joyous occasion, not an opportunity for cyber thieves.”

  1. Don’t shop online on an unencrypted or open wireless network. As convenient as they seem, an airport or coffee shop’s wireless network is not an appropriate place to conduct financial transactions. Entering personal financial information over an unsecured connection may leave your computer open the to hackers and thieves to capture your financial information. Home Wi-Fi networks can also be compromised, so consumers should find out how to secure their connections.
  2. Secure your own computer before shopping online. Before connecting to the Internet or shopping online, take the following three core protections: 1) Install anti-virus and anti-spyware programs and keep them up to date; 2) Install a personal firewall; 3) Regularly update operating system and anti-virus programs to current protections.
  3. Know who you’re dealing with. Before shopping online with an unknown e-store, check out the seller and be sure to get the name and physical address of the vendor in case something goes wrong. If you’re buying gifts on an online auction site, check the track record of the seller before you bid.
  4. Pay the safest way – by credit card, especially when you’re purchasing something that will be delivered later. Under federal law you can dispute the charges if you don’t get what you were promised. You may also dispute unauthorized charges on your credit card. Consider using a “virtual” credit card number.  These numbers replace your plastic credit card number with a new number that is linked to your real account number.  When you’re prompted to enter your credit card number at checkout, you enter the virtual number instead of the real number.  These “virtual” numbers can be set to have a low credit limit, to only work at certain Web sites, or to expire after a certain period of time (two months from date of purchase is a good rule of thumb).  This way, if the Web site you’re shopping at is compromised, the crooks likely won’t be able to run up charges on your real credit account since the virtual number.  A note of caution, however: think twice before using a virtual credit card number for services where you will be billed repeatedly or for things like rental car reservations, since the card may not be billed until you pick up the car.
  5. Only shop on safe sites. When providing payment information, the Web site URL address should change from “http” to “https,” (or, less frequently, “shttp”) indicating that the purchase is encrypted or secured. Look for an icon on the browser (generally in the bottom right of the window), such as an image of a padlock closing, to indicate that the page is secure.
  6. Don’t fall for a phishing email or pop-up. Legitimate companies don’t send unsolicited email messages asking for your password, login name, or your financial information. But scammers do, and it’s called “phishing.” Crooks often send emails that look like they’re from legitimate companies – but direct you to click on a link, where they ask for your personal information. Delete these emails.
  7. Be careful when shopping for a gift in an online auction. Consumers sometimes turn to auctions for harder-to-find collectibles or expensive electronics. Understand how the auction works, and check out the seller’s reputation before you bid. Use safe ways to pay, like a credit card. If you use a 3rd party payment system, read the terms carefully to understand what protection, if any, it offers if you don’t receive what you were promised. Always ask about terms of delivery and return options. Be especially wary of auctions that ask for payment via wire transfer.
  8. Turn your computer off when you’re finished shopping. Many people leave their computers running 24/7, the dream scenario for scammers who want to install malicious software—“malware”—on your machine and then control it remotely to enable them to commit cyber crime. To be extra safe, switch off your computer when you are not using it.
  9. Don’t be tempted by offers of free money. Con artists take advantage of cash-strapped consumers during the holidays to offer personal loans or credit cards for a fee upfront. These scammers simply take the money and run. Beware of emails offering loans or credit, especially if you have credit problems.
  10. Visit www.fraud.org to learn more about protecting yourself from online scams year-round and to report suspicious sites, sellers, or scams. You don’t have to be a victim to report a scam, and your information will help law enforcement go after cyber grinches.

Above all, look into the business or individual with whom you are doing business before making the transaction. For more information on avoiding scams throughout the year, visit www.fraud.org.

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About the National Consumers League

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

FCC Lifeline vote threatens affordable access to broadband – National Consumers League

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November 16, 2017

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

Washington, DC – The National Consumers League is extremely disappointed in today’s vote by the Federal Communications Commission to begin a rulemaking process to alter the Lifeline program. In particular we are concerned that the FCC’s proposal will restrict funding to only facilities-based providers of Lifeline service. Such restrictions would threaten access by the most vulnerable Americans to voice and broadband services by excluding from the market the very Lifeline service providers that have helped make the program a success.

The following statement is attributable to Sally Greenberg, Executive Director of the National Consumers League:

“The current FCC leadership would like the public to believe that its vote today will help bridge the digital divide. In reality, the FCC’s action threatens to exacerbate the current digital divide, with low-income consumers are relegated to expensive, low-quality Internet service while those with means enjoy access to 21st century broadband. We urge the Commission to instead expand outreach to the millions of consumers who qualify for Lifeline, but haven’t enrolled. The National Consumers League stands with the coalition of consumer, rural, tribal, and low-income advocacy organizations who are calling on Chairman Pai to focus on expanding the Lifeline program and promoting policies that bridge — rather than worsen — the digital divide.”

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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 announced resignation of CFPB Director Richard Cordray – National Consumers League

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November 16, 2017

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

Washington, DC—Director Richard Cordray of the Consumer Financial Protection Bureau (CFPB) announced his intention to resign by the end of the month. The following statement is attributable to NCL Executive Director Sally Greenberg: 

“Since 2012, Director Richard Cordray has served as the head of one of the most important consumer protection organizations in our country’s history. Under his leadership, the CFPB returned more than $12 billion dollars to more than 29 million consumers affected by illegal business practices. Thanks to director Cordray, the CFPB has reined in abuses by predatory debt collectors and payday lenders, put the brakes on deceptive student loan servicers, and worked to end the spread of outrageous forced arbitration clauses. 

In honor of his outstanding work, NCL recognized Director Cordray at our annual awards dinner October 25 with a Trumpeter Award for his service to consumers and the American public. From the beginning of his tenure, Director Cordray has been the epitome of an honest, transparent and hardworking civil servant. He oversaw a staff of nearly two thousand public servants, all dedicated to ensuring that consumers were given a level playing field with the financial services industry and protected from serial abusers of the public trust such as Wells Fargo. 

This announcement is a sad day for consumers, especially given the hostility shown by the majority in both houses of Congress and the Trump Administration to the Bureau’s mission of protecting consumers from predatory practices. 

President Trump now has the right to nominate a new director. NCL will remain vigilant to ensure that the President nominates another champion of consumers and the middle class, not a champion of Wall Street and big banks. The CFPB’s has made great progress in protecting consumers, but there is still much work left to be done. Rest assured, NCL will continue fighting on the front lines to ensure that the next director is up to the task.”

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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 welcomes nationwide removal of misleading nutritional scoring system from grocery shelves – National Consumers League

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November 9, 2017

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

Washington, DC—The National Consumers League (NCL) has welcomed news that a supermarket-based nutritional scoring system of food products called NuVal, which at its peak was used in 1,600 grocery stores nationwide, has been discontinued. For the last five years, NCL has been a vocal critic of NuVal’s controversial ratings system. In a letter to the U.S. Food and Drug Administration (FDA) in 2012, NCL called NuVal “fatally flawed,” pointed out that it gave some junk foods higher nutritional ratings than canned fruit, and called for its investigation and removal from grocery stores.

NuVal scored food on a scale of 1-100, with printed labels appearing on shelves next to price labels in stores that used the system. NuVal claimed to help consumers compare products by simplifying their nutritional value; the higher the number, the “better the nutrition.”

“The NuVal rating system was fatally flawed, and its removal from grocery store shelves is a win for consumers,” said National Consumers League Executive Director Sally Greenberg. “Its proprietary algorithmic formula – which was not made transparent to consumers or the scientific community – resulted in snack chips, soft drinks, and desserts being given as high or higher nutritional scores than some canned fruits and vegetables. We welcome the news that NuVal has been discontinued nationally.”

The consumer group criticized NuVal’s nutritional ratings as confusing—not helpful—to consumers trying to make healthy decisions for their families and called on the FDA to step in and set industry-wide standards to govern such systems so that they truly benefit nutrition-minded consumers. Other critics questioned conflicts of interest behind NuVal’s research and food manufacturers.

The Yale Daily News reported that, according to NuVal’s creator, Director of the Yale-Griffin Prevention Research Center David Katz, “Hershey’s paid him more than $731,000 for research, and Quaker Oats had paid him more than $633,000. He has also received funds from Kind Bar and Chobani.”

Last fall, NCL noted that several regional grocery store chains, including Tops Market, based in Williamsville, NY, California-based Raley’s, and Massachusetts-based Big Y, had also begun phasing out the system.

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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.

Advocates urge FTC to protect consumers from pyramid schemes – National Consumers League

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November 3, 2017

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

Washington, DC–Today, a coalition of consumer advocacy organizations, civil rights groups, and pyramid scheme experts joined the National Consumers League (NCL) in calling on the Federal Trade Commission (FTC) to make any guidance it offers to the direct selling industry about pyramid scheme enforcement as strong as possible. 

In 2016, the FTC signaled that it would issue updated guidance to the direct selling industry on how to avoid pyramidal business practices and stay in compliance with the FTC Act. Next week, Acting Chairman Maureen Ohlhausen will be a featured speaker at the Direct Selling Association’s Fall Conference, a venue that the FTC has used in the past to offer guidance to the industry.

The advocacy groups’ letter calls on FTC to ensure that any guidance it offers:

  • Reaffirms case law stating that multi-level compensation should be primarily tied to sales of goods and services to customers outside of the business opportunity;
  • Draws on the lessons of previous FTC investigations and settlements, such as the Commission’s successful actions against BurnLounge, Vemma, and Herbalife;
  • Reiterates that compensation based on internal consumption by distributors must be subject to reasonable and transparent limits; and
  • Makes clear that multi-level marketing companies must be able to substantiate income and health claims and monitor their distributors to ensure that prohibitions against deceptive claims are enforced. 

“The direct selling industry has been furiously lobbying in support of thinly-veiled pyramid scheme legalization bills in Congress,” said John Breyault, NCL’s vice president of public policy, telecommunications, and fraud. “By issuing strong, unambiguous guidance, the FTC has an opportunity to rebut spurious industry claims that there is regulatory confusion and strengthen consumer protections against pyramid schemes that harm millions of consumers. Such guidance will reaffirm how ethical direct selling companies should operate to stay on the right side of the law.” 

In addition to NCL, the letter was signed by Consumer Action, Consumer Federation of America, Consumers Union, Consumer Watchdog, League of United Latin American Citizens, MANA, National Association of Consumer Advocates, National Consumer Law Center (on behalf of its low income clients), Public Citizen, U.S. PIRG, William W. Keep, PhD, and Peter J. Vander Nat, PhD. 

To view the full letter, click here.

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About the National Consumers League

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

National Consumers League condemns President Trump’s decision to side with Wall Street over Main Street – National Consumers League

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November 3, 2017

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

Washington, DC–On Wednesday, President Trump once again sided with Wall Street executives over the middle class by signing a Congressional Review Act resolution to repeal the Consumer Financial Protection Bureau’s (CFPB) arbitration rule. The rule, the result of years of study and a congressional directive would have restored consumers’ constitutional right to access the courts when companies like Wells Fargo defraud them.

The following statement is attributable to Sally Greenberg, National Consumers League executive director:

“It is a hallmark of the American justice system that when individuals are wronged, they can seek justice through the courts. With a stroke of his pen, President Trump stripped away that right from millions of consumers. When companies like Wells Fargo break the law and open nearly 1.4 million fraudulent accounts without their customer’s consent, consumers must be able to band together and hold corporate wrongdoers accountable. Congress and President Trump’s decision to take away this basic protection underscores the need for NCL to work harder than ever to fight to restore consumers’ fundamental legal rights including, the right to sue when they are harmed by big corporations.”

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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.

Senate votes to undermine Americans’ right to a day in court – National Consumers League

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October 25, 2017

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

Washington, DC–The National Consumers League (NCL) condemns the Senate’s passage of a Congressional Review Act resolution to repeal the Consumer Financial Protection Bureau’s (CFPB) arbitration rule. The rule would have allowed consumers access to courts after big banks like Wells Fargo steal their identity, or credit bureaus like Equifax compromise consumers’ most personal information.

The following statement is attributable to Sally Greenberg, NCL executive director:

“Last night, while most Americans were sleeping, 50 Senate Republicans and Vice President Mike Pence voted to take away our sacred right to a day in court. Today, in the aftermath of massive financial wrongdoings like Wells Fargo’s nearly 1.4 million fraudulent accounts scandal or Equifax’s massive data breach, financial companies will continue to be free to bury binding arbitration clauses in their terms of service. These ‘rip-off clauses’ are designed to prevent consumers from having their day in court or joining together to form a class action lawsuit after they are harmed.

In fact, earlier this year the NCL Board of Directors voted to take NCL’s operating capital out of Wells Fargo and switch to Bank of Labor precisely because of Wells’ requirement that customers to give up their rights. Bank of Labor, Bank of America and many credit unions are thriving without forcing their customers to sign away rights through these odious ‘rip-off clauses.” We applaud CFPB director Richard Cordray, whom NCL is honoring this evening, for his efforts to protect the consumer rights that were just taken away in one fell swoop by this unfortunate Senate vote.

The Senate’s decision to side with Wall Street over consumers is shameful. The denial of one of our most basic rights as Americans — the right to our day in court — is a massive step backwards for consumers and our nation. While this may be a setback, the National Consumers league will continue fighting before Congress and the Administration to reaffirm consumers basic rights, including, the right to justice.”

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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.