Consumer Law & Policy Blog

More on Debt Collector Use of Pseudonyms

by Jeff Sovern

We posted last week on a piece in the Times that mentioned a debt collector using a pseudonym; here is my letter in the Times on that issue.

Associated Press Investigation Claims That U.S. Regulators Are Weakening Nuclear Safety Standards To Oblige The Nuclear Industry

The Associated Press claims in a new investigation that federal nuclear regulators have repeatedly weakened safety standards to meet the demands of a nuclear industry unable or unwilling to meet more stringent standards aimed at protecting the public. Here's an excerpt from today's AP story:

Time after time, officials at the U.S. Nuclear Regulatory Commission have decided that original regulations were too strict, arguing that safety margins could be eased without peril, according to records and interviews. The result? Rising fears that these accommodations by the NRC are significantly undermining safety — and inching the reactors closer to an accident that could harm the public and jeopardize the future of nuclear power in the United States. Examples abound. When valves leaked, more leakage was allowed — up to 20 times the original limit. When rampant cracking caused radioactive leaks from steam generator tubing, an easier test of the tubes was devised, so plants could meet standards. Failed cables. Busted seals. Broken nozzles, clogged screens, cracked concrete, dented containers, corroded metals and rusty underground pipes — all of these and thousands of other problems linked to aging were uncovered in the AP's yearlong investigation. And all of them could escalate dangers in the event of an accident.

More on Income Inequality

Today's Washington Post has this lengthy piece on increasing income inequality in the United States, which has been driven in large part by exploding executive compensation. Here are a couple excerpts:

In 1975 ..., the top 0.1 percent of [U.S.] earners garnered about 2.5 percent of the nation’s income, including capital gains, according to data collected by University of California economist Emmanuel Saez. By 2008, that share had quadrupled and stood at 10.4 percent. The phenomenon is even more pronounced at even higher levels of income. The share of the income commanded by the top 0.01 percent rose from 0.85 percent to 5.03 percent over that period. For the 15,000 families in that group, average income now stands at $27 million. In world rankings of income inequality, the United States now falls among some of the world’s less-developed economies.

* * * What the research showed is that while executive pay at the largest U.S. companies was relatively flat in the ’50s and ’60s, it began a rapid ascent sometime in the ’70s. As it happens, this was about the same time that income inequality began to widen in the United States... .

We addressed this topic in April.

 

Will Spare Tires Become History?

Spare tires provide security for consumers when a tire blows on a rural highway. So, until recently, virtually all new cars came with spare tires. But federal regulators have never required them, the idea being that they are not essential to the vehicle's safety. And, now, economic and regulatory trends have prompted change. Today, more the 10% of new cars come without a spare, with the number growing every year.

Why? A car without a spare means lower costs for the manufacturer and lower gas usage for the consumer, in turn making it easier for the manufacturer to meet federal miles-per-gallon requirements.

Moreover, there's an argument that there's less need for a spare these days because the tires that come installed on the cars wheels are higher quality than ever, meaning that they are less likely than ever to go flat or leak. And, finally, cars today are equipped with tire pressure monitors that encourage consumers to check their tires before things get really bad.

Read about the no-spare phenomenon here.

Effective Consumer Disclosures

by Jeff Sovern

I (and plenty of others) have written in the past about consumer disclosures that haven't worked.  But what about consumer disclosures that do work?  As residents of Los Angeles know, that city began grading restaurant hygiene about a decade ago (New York City adopted a similar system recently).  Restaurants are required to post their grade--typically an A, B, or C--at the entrance.  That simple disclosure seems to have made a huge difference.  My research assistant, Ourania Sdogos, recently dug up some studies evaluating the LA system (you can find them here, here, and here).  The result: Not only does it appear that some consumer use the grades to seek out cleaner restaurants, but restaurants striving for higher grades also improve their hygiene.  Hospitalizations caused by food-borne illnesses also declined.

It appears, then, that many consumers do pay attention to disclosures consisting of a single letter.  It also seems that such a disclosure system inspires businesses to make changes so that they receive a better grade.  In other words, one way to get businesses to change their behavior is to give them a grade for the behavior and post it prominently at the business's entrance.  In addition, it seems that even consumers who might not pay attention to the grade have benefited from the grading system, because restaurants competing for the dollars of those who do pay attention make improvements that benefit all.  This last result is, of course, predicted by Alan Schwartz & Louis L. Wilde's famous--but much criticized-- article, Imperfect Information in Markets for Contract Terms: The Examples of Warranties and Security Interests, 69 VA. L. REV. 1387 (1983).

Not that this is a surprise, but If you want effective consumer disclosures, a single letter is a good way to go.  

 

Calories, the Cost of Food, and Obesity

It's hard to deal with an obesity epidemic when high-calorie foods are cheap and low-calorie foods are expensive. That's generally true in the U.S., as explained in this short article by David Leonhardt of the New York Times. Leonhardt explains that a consumer "would have to spend about $5 to buy 2,000 calories at McDonald’s, $19 to buy 2,000 calories worth of canned tuna and $60 to buy 2,000 calories worth of lettuce." Not only are "bad" foods cheap and "good" foods expensive, but the problem is getting worse: For example, since 1978, compared to inflation generally, the price of carbonated drinks has fallen 34% relative to all other prices, while the prices of fruits and vegetables is up nearly 40%. Take a look at this graphic showing calories-per-dollar of various foods.

 

UPDATE: One of Leonhardt's readers responds:

$1 of black beans has 840 calories and a $1 of rice goes pretty far too. Veggies are a bit pricey, but it is very cheap to get healthy calories cheap if you want to. Throw in some relatively cheap spices, and just a bit of the more expensive veggies, and there's a lot of very cheap, nutritious and varied meals that can be made with little more than basic grains and legumes. Just have to get outside of western cooking which is meat centric. Dhaals, curries, soups, rice and beans, burritos, etc. are all good cheap options. People just aren't willing to expand their horizons away from meat and standard western recipes (rice and beans being the exception, greens and beans are fairly affordable too, collards aren't expensive).

The Hill: GOP targets funding of Consumer Bureau

Story here. The House Appropriations Committee draft financial services bill would make the CFPB the only bank regulatory agency subject to the annual appropriations process and would cut the Bureau's funding by more than half.  Meanwhile, the Washington Post reports that Republican Senate Minority Leader Mitch McConnell "stands by his vow to block any candidate" to lead the Bureau and that Representative Barney Frank charges that Republican oppose Elizabeth Warren because she is a woman.

Tax Equality for Same-Sex Couples

Federal tax law benefits opposite-sex married couples in various ways. Federal tax law does not provide those benefits to same-sex couples, even for same-sex couples that are married in the five states that authorize same-sex marriage. Here's an important example: Like many employers, my employer has established an account from which employees receive funds to pay for health care expenses that are not subjected to federal (or state) income tax or federal social security tax. Under federal law, I can use the money to pay not only for my health care costs but for the health care costs of my wife because my wife is an opposite-sex spouse. But because federal law does not recognize same-sex marriage, these funds may not be used to pay the health care costs of the employee's same-sex spouse (or partner). Apparently, some private employers have eliminated this disparity by "grossing up" the salaries of their employees who have same-sex partners -- that is, the employer pays the employee enough to make up for the tax on the income used to pay the same-sex partner's health care costs that would have been tax-free if the partner were an opposite-sex spouse. (The employer may also provide the employee money to pay the tax on the additional cash income.) Now, as the New York Times explains, the City of Cambridge, Massachusetts, prompted by an employee who brought the issue to the City's attention, will become the first governmental employer to do the same thing:

Unlike married couples, employees who use domestic partner health coverage for their partners must pay taxes on the value of that coverage (unless the partner is considered a dependent). If the federal government recognized same-sex marriage, these couples could avoid the tax since it doesn’t apply to heterosexual married people. On top of that, employees can’t use pretax dollars to pay for their partner’s insurance premiums — another bonus that’s available only to opposite-sex married couples. So Cambridge officials . . . decided to reimburse employees for the extra costs. The policy will go into effect on July 1 for nonunion employees; it will go into effect for union employees “pending collective bargaining obligations.”

Read the whole article here.

Wyoming's 11th Consumer Issues Conference

 
The University of Wyoming's 11th Consumer Issues Conference will be held on October 5 to 7, 2011 with the theme of Pills, Potions and Profits. The location will be the Wyoming Union on the campus of the University of Wyoming. The conference features speakers on business/legal, health and criminal aspects of drugs and consumers. There will also be a documentary film on the drug industry, a panel discussion on medical marijuana and a concluding panel of legislators to discuss policy issues raised by the conference. 

The marketing of drugs, both prescription and over-the-counter, is becoming more pervasive but raises some special issues for consumers, including prescription drug advertising, advertising of dietary supplements and other over-the-counter remedies, Internet and cross-border drug sales, drug patenting and pricing issues, the culture of drugs in American society, alternative medicine, drugs and the elderly, medical marijuana, and even criminal issues. This conference will bring to the forefront many business, health and legal issues associated with consumer drugs in ways that can be used by consumers, businesses, attorneys, educators and policy makers.

CLE credits are pending.  Online registration will be available by July 1st.  Program details are on the conference website, www.uwyo.edu/consumerconference.  Cosponsored by the College of Law.

For more information, contact Virginia Vincenti, vincenti@uwyo.edu, 307-766-4079 or Dee Pridgen, pridgen@uwyo.edu, 307-766-5262.

Call for Posters
Posters profiling project or academic research are welcome. Please submit an abstract (up to 250 words) on the poster content. With the submission, provide your contact information (name, title, affiliation, e-mail and phone number) and whether your poster is research or project oriented. The posters are to be available during the conference in the conference venue (the Wyoming Union on the campus of the University of Wyoming) by 8:15 am on 6 October 2011 and should remain up until noon on 7 October. During the midmorning break on the 6th (9:55 and 10:30am) the authors should be next to their posters to discuss their work and answer questions. The deadline for submissions is Wednesday, 15 July. Submission guidelines and presentation tips are available on the conference website homepage.

Life Expectancy

As explained in today's Washington Post, life expectancy continues to go up in the United States, but, despite far greater expenditures on health care in the U.S. than in Europe (for instance), life expectancy in the U.S. lags behind the rest of the developed world:

In 2007, life expectancy for American men was 75.6 years, compared with 73.7 years a decade earlier. For women it was 80.8 years in 2007, up from 79.6 in 1997. Both rank the United States as 37th in the world in 2007.

And there are significant differences within the U.S. based on region:

The county-based life expectancy for men ranged from 65.9 years in Holmes County, Miss., to 81.1 years in Fairfax County. Women had the longest life expectancy in Collier County , Fla., which includes Naples (86 years) and the shortest in Holmes County, Miss. (73.5 years).

Read more here. And go here to read much more about the study on which the Post article is based.