Consumer Law & Policy Blog

Tobacco companies and DOJ agree on details of messages to correct companies' lies about smoking and health

Fifteen years ago, the Department of Justice sued the major cigarette companies, alleging that the companies conspired to mislead consumers about the risks of tobacco products. The US District Court for the District of Columbia ruled for DOJ, and the ruling was upheld on appeal. Among other things, to remedy the companies’ misleading statements, the court ordered them to put out advertisements correcting their lies and to stop marketing cigarettes as “light” or “low-tar.”

The court previously approved the text of the corrective messages, and that order is on appeal. On Friday, DOJ and the companies reached an agreement on the format and placement of the messages. They agreed that they will appear in the print and online editions of newspapers, on television, and on the companies’ websites. The agreement also provides that additional information on the adverse health effects of smoking will appear on cigarette packages.

The previously court-approved text of the messages will explain that a federal court found that the four companies “deliberately deceived the American public,” describe companies’ wrongdoing, and include correct public health information concerning the dangers of smoking and its addictiveness, second-hand smoke, and the truth about low-tar and light cigarettes.

Tobacco-control groups, which participated in the litigation as intervenors, issued a press release characterizing the agreement as an “important step forward.”

Lack of public awareness may be Affordable Care Act's biggest problem

The federal government's faulty Affordable Care Act (ACA) website -- and similar problems on some state-run ACA websites -- may not be the biggest problem facing the ACA's implementation. As this article by Jonathan Easley explains, a new survey conducted by Enroll America, "a nonprofit with close ties to the Obama administration that is aiming to sign people up, found seven out of 10 uninsured people in the United States haven’t visited an ObamaCare online exchange yet. ... 81 percent said they didn’t know March 31 is the open enrollment deadline, after which they would be subject to the individual mandate penalty, if they remain uninsured. Sixty-nine percent said they weren’t aware that tax subsidies and financial help might be available for them, and 59 percent said they didn’t know anything about plans that may be available in their state."

Ed Mierzwinski on the Target data breach

On his blog at U.S. PIRG, Ed Mierzwinski expounds on the Target data breach in a post entitled Target says "Oops, 70-110 million consumers hacked."  He points out that 70 to 100 million, "not the original 40 million customers, had their credit or debit card numbers hacked in December (or possibly at other times). Even worse, Target is admitting that the database stolen from the big-box retailer included a lot more than credit or debit card numbers and their associated security codes and expiration dates." Ed notes that federal law provides less protection to debit-card consumers than to credit-card consumers, but that, in either case, fraudulent use of your card can be a major headache even if it doesn't send you to the poorhouse. Ed warns consumers to be aware of phishing attacks based on information obtained by bad guys from Target. And he says consumers should not buy expensive credit-monitoring services, which he views as nearly worthless. Worth reading.

And while you're at it, take a look at our earlier post on this topic, which contains tips from the National Consumer Law Center, Consumer Action, and U.S. PIRG about how to limit damage from the Target data breach. That was posted back when we thought only 40 million customers were affected.

Times Article on the Possible Use of Eminent Domain to Deal with Underwater Homes

Here.  The article describes the opposition from the industry to the plan--which includes threats not to make mortgage loans in the future in communities that use eminent domain to seize underwater home--and also discusses what happened in 2002 when the industry made good on such threats in response to a different law:

In 2002, the Georgia Legislature passed the toughest predatory-lending law in the country. Hailed as a victory for consumers, it was intended to prevent abusive practices like steering customers to high-interest loans. Lenders immediately started trying to dismantle the law, warning that the “good guys” would no longer make loans to people with poor credit.

Some lenders did pull out of the state, and two of the three ratings agencies said they could no longer rate Georgia loans for resale to investors because they could be sued under the law. The state banking commissioner estimated that the mortgage market shrank by 15 percent. The following year, after a nasty fight, lawmakers gutted the statute.

[Securities Industry and Financial Markets Association] officials point to this affair as proof that messing with housing finance can have ruinous effects. But it is an example that offers other lessons, too.

The loans that disappeared from the market after the law was passed were the same kinds of subprime loans that set off the foreclosure wave; conventional 30-year mortgages were not affected. The lenders whose departure was met with such alarm included Countrywide Financial, whose practices during the housing boom have cost billions in legal settlements.

In an article in The Atlanta Journal-Constitution, experts concluded that had the law stayed intact, the housing crisis would have been less dire in the state, which became one of the hardest-hit. The article even implied that the whole country might have fared better, because “the Georgia drama also stemmed a tide of similar laws that were being considered in other states.”

The CFPB's Past, Present, and Near Future

WaPo has the article about the past and present, A watchdog grows up: The inside story of the Consumer Financial Protection Bureau, while the Times covers the future in Federal Consumer Agency Ponders Its Next Crusades.  Both are worth a read.  (HT: Ed Mierzwinski)

TV News Report on Binding Arbitration

Here. 

Jon Stewart's interview of CFPB director Richard Cordray

Go here or click on the embedded video below to watch Jon Stewart's two-part interview of Consumer Financial Protection Bureau director Richard Cordray. (The second part of the interview starts right after the first part ends.)

The Daily Show
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Are genetically modified foods "all natural"?

For several years, consumers have brought suit against manufacturers of processed foods (for example, bottled teas, granola bars, and cereals) advertised as “all natural.” In these lawsuits, the consumer alleges that the all-natural claim is false and misleading because the foods are not in fact “all natural.” Early cases often focused on the use of high fructose corn syrup in the foods, and more recent cases often focus on the use of genetically modified ingredients.

One defense often raised (with mixed success) by the defendant company is that defining “natural” foods should be left to the Food and Drug Administration. Two decades ago, the FDA observed that “because of resource limitations and other agency priorities,” the FDA had not yet defined “natural” or “all natural,” but acknowledged that doing so could “abate” “the ambiguity” that “results in misleading claims.” To date, though, the FDA, has not undertaken to formulate a definition.

Last summer, the judge presiding over one “all natural” case, Cox v. Gruma Corp., asked the FDA to define “all natural.” (Judges presiding over Barnes v. Campbell Soup and Lewis v. General Mills later made the same request.) Specifically, the judge asked the FDA “whether and in what circumstances food products containing ingredients produced using bio-engineered seed may or may not be labeled “Natural.” This week, the agency responded by declining to provide a substantive answer. The FDA explained that the question extended beyond genetically modified seed and that providing a definition would require it to undertake notice-and-comment rulemaking.

Meanwhile, in a December 5 letter to the FDA, the Grocery Manufacturers Association informed the agency that it would be submitting a citizen petition in 2014 to formally request that the agency issue a regulation deeming foods containing genetically modified ingredients “natural.”

Corporations hiding in cyberspace

Paul has often posted on (and is one of the leading experts on) protecting consumers' anonymity in speaking online. (A good example is the Hadeed case, which you can read more about here.)

But cyberspace offers opportunities for companies to hide also, and it can be a barrier to holding them accountable for wrongdoing. For instance, we've posted about KlearGear, an online retailer that demanded that a Utah couple who posted an unflattering online review pay KlearGear $3500 as a penalty for violating a "non-disparagement clause"; when the couple, John and Jen Palmer, refused to pay, KlearGear reported the debt to the credit agencies with serious and ongoing consequences for the Palmers and their young son. The Palmers have sued KlearGear for damages. (Disclosure: Public Citizen represents the Palmers.) It may sound to many of you like the Palmers have a good case (we certainly think they do).

But first they have to find the company, and that is harder than it sounds.

FTC Takes Aim at Deceptive Ads for Fad Weight-Loss Products

The Federal Trade Commission announced today a law enforcement initiative, called “Operation Failed Resolution,” aimed at stopping marketers that use deceptive advertising claims to sell weight-loss products. At the same time, the FTC announced settlements in cases it brought against four different weight-loss companies.

For example, ads Sensa promised that, with their product, consumers could “sprinkle, eat, and lose weight” and “Get a gym body without going to the gym.” Sensa has now agreed to pay to the FTC $26.5 million to settle charges that it deceived consumers with false and misleading claims. The FTC will use the money to provide refunds to consumers.

At the Washington Post’s Wonkblog, though, Lydia DePillis asks whether the FTC’s efforts are really paying off. She notes that “weight-loss companies seem not to be dissuaded by some of them getting busted once in a while” and that “traditional media have lost control of the advertising market.”