Archive for the ‘Activism’ Category

A couple weeks ago, VICE did some incredible and shocking reporting about an attempt by the predatory payday lending industry to sabotage proposed rules designed to finally rein-in industry practices that have ruined lives by trapping far too many Americans into endless cycles of debt. Payday lenders take advantage of consumers by charging astronomical interest rates and fees, requiring people to take out strings of additional loans that stack up into insurmountable piles of debt.

The staggering amount of debt people are in because of payday loans is shocking, but it’s also shocking how hard industry is fighting these commonsense consumer financial protections. At least it’s shocking to those who are not familiar with corporate America’s all too successful tactic of gaming the process that agencies use to produce new regulations that benefit consumers. Industry does that by turning that very same regulatory process against the rules meant to help people. For those of us at Public Citizen who are constantly trying to defend consumer regulations from being blocked or diluted by industry, this is an all too common theme and very much the rule rather than the exception.


The resort where payday lenders met at.

VICE uncovered insider documents at a predatory lending industry conference showing exactly how the industry planned to attack and undermine the critical new predatory lending regulations that the U.S. Consumer Financial Protection Bureau (CFPB) has proposed to put in place. The conference was organized by the Consumer Financial Services Association of America, the industry’s trade group, and held at the posh Atlantis resort in the Bahamas.

In multiple sessions, participants in the predatory lending industry learned one of the major strategies to defeat the new CFPB rules: turn the very customers the industry fleeces with high interest loans into the public face of the campaign to defeat restriction on those loans. In truly cynical fashion, predatory lenders were encouraged to “get every customer that comes into your store… to write out a handwritten letter and tell the bureau why they use the product, how they use the product, and why this will be a detriment to their financial stability.” In short, the very borrowers that would be protected from the kinds of debt entrapment loans that the CFPB will potentially prohibit would be used as the key voices arguing against those new rules.

Making matters worse, borrowers might not even know that they had signed up for this campaign to sabotage the predatory lending rules. The article describes previous attempts by the industry to trick customers into submitting comments against restrictions on predatory loans at the state level.

Of course, federal agencies do want to hear from the public about proposed rules in order to improve them before they are finalized. Indeed, the public comment period is an important way for the public to meaningfully participate in giving their opinion, as long as it’s done on a good-faith basis.

The problem here is that the predatory lending industry knows there is significant grassroots support for the new CFPB rules—no one wants loan sharks to take advantage of consumers. So they schemed to find a way to counter that with their own “flood” of comments without making it look like they are all coming from industry groups that will benefit from killing the new rules. That’s why they’re exploiting their customers and pushing them into submitting a comment.

As the article notes, making it look like there’s real grassroots opposition to the CFPB rules is a key tactic in a broader overall goal of trying to delay the new rules as much as possible so the predatory lenders can keep their business model going as long as possible.

The big takeaway is that whenever agencies like the CFPB put out new rules to protect the public by holding Big Business accountable, the response of Big Business is to use every opportunity in the regulatory process to delay rules. And as our chart of the regulatory process shows, there are a lot of opportunities — far too many, in fact.

That’s why this summer Public Citizen released a groundbreaking report showing just how long it takes for our government agencies to put in place the most important new rules that protect the public. The results were shocking. At most agencies, it takes almost an entire presidential term, four years in other words, to get out a major new rule. Even worse, the trend is going in the wrong direction, with rules finished this year holding the record for the longest rulemakings over the last twenty years. So if you’re keeping score at home, it looks like the Big Business delay strategy is working pretty well.

The good thing is there’s a way to take action. You can make sure your voice is heard in support of new proposed rules to limit predatory lending  over the fabricated ones that the industry puts forward, by taking action to support a strong rule to protect consumers from payday loans.

Finally, as some Republicans in Congress continue to try to rig the regulatory system with more opportunities for industry delay, keep a lookout for other ways to engage with your elected members to make sure they know you oppose any legislation that harms the ability of agencies to write rules to better protect the public.

In May, the Consumer Financial Protection Bureau (CFPB) announced they wanted feedback on their plan to curb forced arbitration clauses.

binding-contract-948442_640Public Citizen members sent a remarkable 27,890 comments to the CFPB. Once they are added in, our members alone will have tripled the total amount of comments (based on the numbers reported by CFPB’s website around Monday’s closing deadline).

For such a previously under-the-radar issue, this is a huge accomplishment.

Forced arbitration is the latest trick corporations are using to avoid accountability and keep consumer complaints out of public courts. Public Citizen calls them rip-off clauses, because the fine print has crept into contracts everywhere, from Amazon to Chase to Pokémon Go. Consumers are unknowingly signing away their rights to take future complaints to court. Instead, they’re decided by private companies or individuals chosen by the corporation in a kangaroo-court called an arbitration proceeding.

The problem doesn’t end there. Often these rip-off clauses also prevent consumers from joining together in a class action lawsuit. This is critical, because it often doesn’t make sense for consumers to fight companies alone when potential damages are small. Take for example James Pendergast, who was charged $20 by Sprint for “roaming” while he was in his house.  A lawyer told him the case would take six figures to take to trial and there was the possibility he would be on the hook for Sprint’s legal bills. Almost no one would take on such a small dollar case by themselves; which is why class action suits are an important tool for consumers to band together to level the playing field.

We applaud the steps being taken by CFPB Director Richard Cordray and his staff (urged on by our members’ call to action) to ban forced arbitration language from financial services consumer contracts.

Public Citizen and Americans for Financial Reform have collected more than 21,000 signatures from people in agreement: Students deserve their day in court if universities are ripping them off — and the Department of Education should not facilitate predatory colleges by giving them federal funding.

Click to view individual petitions and signers:

Public Citizen (10,277 signers)
Americans for Financial Reform (11,145 signers)

Three weeks ago, Public Citizen formally petitioned the Department of Education to consider a rule to withhold federal Title IV funding from colleges and universities that bury forced arbitration clauses in students’ enrollment contracts. Our press release can be found here .

These arbitration clauses, usually buried in the fine print of an enrollment contract, bar students from seeking justice in court if the students feel their schools do not live up to their end of the deal. For-profit colleges have been using these clauses to ensure students can’t hold the colleges accountable in court, but are instead subjected to a private arbitration process that favors large corporations and their lawyers.

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It couldn’t be simpler: The president has nominated a U.S. Supreme Court justice. Now the U.S. Senate should provide or withhold its consent through an up-or-down vote on the nominee.

Senate Majority Leader Mitch McConnell said only minutes after the nominee was announced that “The Senate will appropriately revisit the matter when it considers the qualifications of the nominee the next president nominates, whoever that might be.”

Why the next president? Why not wait until the one after that, or the one after that? The United States has a president who was elected fair and square. That president has nominated someone. Now it’s time for the Senate to scrutinize the nominee and take an up-or-down vote on his confirmation.

Americans can take to the streets to advance the demand that the Senate Do Its Job and take an up-or-down vote by joining the Democracy Awakening mobilization, when thousands will converge on Washington, D.C. from April 16-18.

We’ve had a busy few weeks at Public Citizen.

This month we delivered over 2 million petition signatures for five different campaigns for public justice and a more democratic government.

One of the most rewarding parts about working here is seeing how our actions take shape both before and after the petitioning process.

The frustration with pay-to-play politics and greed is always there, but it’s worth it to see the shock on a staff member’s face as we deliver thousands of petition signatures to congressional offices, the crowds that gather to watch millions of voices being heard in front of the White House, or the actions taken across the country to make the system a little more just.

Public Citizen will continue to fight for a stronger democracy and public protections and we will continue to oppose threats to the public interest that reward greed and recklessness.

Here’s what we’ve been up to recently:

Over 200,000 Signatures Delivered to Congress on the #NoRiders #CleanBudget Petition

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