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How often must we read the day’s headlines and proclaim, “They’ve got to be kidding me!”
Consumers have seen some major improvements in consumer protections, particularly in the past year. Many of those gains have been made by government agencies that have passed rules to help protect our privacy online, our dispute resolution rights, our financial future and much more.
Yet, under this new administration and Congress, much of the progress that’s been achieved for American consumers is now at risk of repeal.
Privacy online: Consumers gained the right to protect their privacy online in October, when the Federal Communications Commission voted to put consumers in control of their online information sharing. Internet service providers are now required to get customer consent before using or sharing their personal information (e.g., location, health data and browsing history) with a third party online.
Risk: However, new FCC Chairman Ajit Pai recently froze the rule. Pai consistently has opposed internet privacy rules arguing that FCC rules “disproportionately burden ISPs” over online companies not under FCC jurisdiction.
Retirement advice: Thousands of dollars in retirement savings can quietly, legally be lost from retirement accounts, over time, because of conflicts of interest. Conflicts can arise when a broker focuses more on profits than providing independent financial advice. The Labor Department’s fiduciary rule eliminates many of those conflicts because it requires financial advisers to put their clients’ best interests first when offering advice about retirement funds.
Risk: The rule’s April start date has been delayed by the current Labor Department for 60 days for even more review of the rule’s impact on the market, which means to appease investment industry interests. While many investment firms have been preparing to abide by the “best interest” rule, the new administration is considering how to repeal or replace this protection.
Class action protection: The Consumer Financial Protection Bureau has proposed a plan to eliminate mandatory bans on class action lawsuits in consumer contracts. Class action suits are relied on by consumers seeking to stop a corporate practice, when each person’s claim would be too small to justify the cost of an individual lawsuit. Class action suits bring accountability to the market by challenging unfair, deceptive or predatory corporate practices.
Risk: This proposed rule is now targeted for termination, as is the agency that initiated it.
Both the Trump administration and Congress have threatened to abolish the Obama administration’s cornerstone of financial reform, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the only federal consumer financial watchdog agency, the CFPB.
In his second week in office, the new president issued an executive order to review Dodd-Frank with an eye toward significantly scaling back federal regulations designed to make the financial industry more accountable.
Some GOP members of Congress have had the CFPB on their hit lists for as long as the bureau has existed, believing falsely that the consumer financial regulator is too powerful and independent. It has more checks and balances than any other federal financial regulator.
Using the Congressional Review Act, Congress has threatened to strike down dozens of rules that were issued to protect the public. With little debate and no opportunity for appeal, the CRA allows lawmakers to repeal rules that date as far back as June. Worse, this blunt instrument prevents regulators from issuing rules that are “substantially similar” to those repealed by the act. The Senate’s first use of the CRA was to file a resolution to repeal the CFPB rule to ensure that prepaid card users’ money is safe and sound. The prepaid rule requires card issuers to provide fraud protection, fee disclosures and error resolution for cardholders, similar to current debit card protections.
Time will tell how many regulatory rollbacks will be realized and what their impact will be. Meanwhile, consumers and their advocates must call these actions out for what they are: an abuse of power and a misguided effort to restore even more control to Wall Street over Main Street. Consumer Action will continue to work in coalition with other advocates strongly opposing repeal of these critical consumer protections.
Ruth Susswein is Consumer Action’s deputy director of national priorities.
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