Archive for the ‘Consumer Protection’ Category

wellsgraph2The Fair Arbitration Now coalition strongly denounces Wells Fargo and its CEO, John Stumpf, for refusing to end the bank’s practice of preventing defrauded customers from suing in court. At a hearing held in the U.S. House of Representatives Committee on Financial Services yesterday, Stumpf stated unequivocally that Wells Fargo will continue to force consumer disputes into secret individual arbitration. The hearing examined Wells Fargo’s massive scheme to fraudulently open accounts in his its customers’ names.

The FAN Coalition is disappointed, but not surprised, that the CEO of a powerful financial institution would publicly champion forced arbitration.  In 2015, the Consumer Financial Protection Bureau (CFPB) released a comprehensive study on forced arbitration, which found that it is heavily rigged in favor of financial institutions. Among other things, the CFPB found that in forced arbitration, consumers bringing claims against corporations won only 9 percent of the time. However, when corporations sued their customers, the corporation won in 93 percent of arbitrations. Additionally, arbitration proceedings are completely confidential, which allows which allows corporations like Wells Fargo to hide widespread wrongdoing, as was the case with their fraudulent account cross-selling scheme.

Yesterday, Stumpf was asked by Rep. Brad Sherman (D-CA) whether his bank would continue to invoke forced arbitration clauses buried in the fine print of its customer contracts to prevent customers from holding the bank accountable for its illegal activities. Stumpf refused to end the practice, stating that he “believes in arbitration.” Stumpf previously declined to restore his customers rights last week when asked by Sen. Sherrod Brown (D-OH) during a hearing held by the U.S. Senate Banking Committee. At the same Senate hearing, Sen. Elizabeth Warren (D-MA) stated that the bank’s use of forced arbitration allowed them to cover up their patterns of abusive conduct, noting that “[i]f we had class actions on thisback in 2010, 2009, 2008, then this problem never would have gotten so out of hand.”.

The CFPB recently proposed a rule to restore consumers’ right to join together in class actions. More than 280 consumer, civil rights, and small business advocacy groups and over 100,000 individuals commended the CFPB for taking this crucial step to limit big banks’ and other financial companies’ efforts to escape accountability for breaking the law, and urged the agency to use the full force of its authority to restore consumers’ right to choose how to resolve disputes with financial institutions.

497px-edward_snowden-2Oliver Stone’s 2016 film Snowden debuted at the height of a controversy over whether or not President Obama should pardon Edward Snowden. His defenders argue that his disclosures prompted important legal and policy changes, while his opponents argue that he’s a criminal who should come back to the United States to stand trial.

The film itself paints a portrait of Snowden as a young conservative from a military background. He begins his career with the Central Intelligence Agency (CIA) with a loyalty to the United States and a desire to serve his country. As he transitions through different positions with private contractors in the intelligence community, he becomes increasingly disturbed by the breadth of government mass surveillance systems. What he witnesses at work haunts him – he develops an aversion to being photographed – and plagues his relationship with his girlfriend. Eventually, it leads him to flee to a hotel room in Hong Kong where he works in secret with The Guardian’s Glenn Greenwald and Ewen MacAskill and documentary filmmaker Laura Poitras. They race against the clock to make his story public before the government can arrest him.

The rest, as they say, is history.

It’s easy to get lost in the controversy of Snowden’s disclosures, but it’s important to remember the context of his decision to go public. Snowden was familiar with the whistleblowers in the intelligence community who came before him. Despite making their own disclosures through designated channels within the government, these workers had no safeguards against the severe retaliation they faced.

Take the case of Ed Loomis, a former National Security Agency employee and contractor within the intelligence community. After he reported an ineffective and wasteful surveillance program through a designated government hotline, the government responded by revoking his Top Secret security clearance, rendering him unable to work in the intelligence community. The Federal Bureau of Investigation (FBI) also raided his home for five hours. He and his wife watched as agents in Kevlar vests confiscated their possessions.

Contractors in the intelligence community deserve better than what happened to Ed Loomis. Public Citizen and many other organizations committed to open and transparent government support extending protections to contractors who blow the whistle on waste, fraud, and abuse in the intelligence community.  Without safeguards against employer retaliation, whistleblowers may either stay silent about government wrongdoing or make disclosures through the media.

Lawmakers recognize the urgent need for reform, but change has been slow. In 2015, Sen. Claire McCaskill (D-Mo.) introduced a bill to extend whistleblower protections to contractors in the intelligence community. In theory, this bill should not be contentious. Certain intelligence community contractors had access to such protections for a limited time without any evidence of negative consequences to national security. But, lawmakers controversially revoked these rights in 2012. So far, Congress has failed to take action on Sen. McCaskill’s critical measure.

Snowden ends with familiar audio clips from the 2016 presidential primary debates where the candidates voiced their opinions about his actions. Their reactions are mixed, but frustratingly, there is no discussion of the much-needed whistleblower protection reforms like those in Sen. McCaskill’s bill.

The controversy over Snowden and his 2013 disclosures is unlikely to end anytime soon. However, if policymakers want to prevent future national security leaks, they should make whistleblowing safe for all intelligence community workers – including contractors. Congress should enact Sen. McCaskill’s bill to protect these individuals who bravely risk so much in serving the public good.

Our country is still reeling in the aftermath of the greed-fueled contagion of the 2008 economic collapse and Wall Street getting caught in villainous behavior is daily news. The anger of the American public toward Big Banks that were bailed out while average citizens went under—institutions that continue to get away with mere slaps on the wrist to settle claims of severe wrongdoing— is the foundation of the current populist political surge. It’s not surprising that Hollywood wants to get in on the act, and they should be applauded.

oneheart-invite215The Academy Award-winning  film The Big Short spotlighted for the movie-going public the complex web of financial maneuverings that tumbled down like a house of cards, leaving millions without homes and millions more with empty nest eggs. “A-listers” Julia Roberts, George Clooney, and Jodie Foster have even embraced the “us-versus-Wall Street” theme in the recently-available-for-the-small-screen film, Money Monster. The plot focuses on the problems that cascade from an everyman feeling wronged by a high-speed trading firm, and a “glitch” that bottomed out the value of a stock. Without commenting on the quality of the film, it can be said with all conviction that such glitches are not fiction.

In May of 2010, there was a flash crash that brought the curtain down on a trillion dollars of market value in a matter of minutes. And, in October 2013, in an unexpected twist, the normally very steady U.S. Treasury bond market went on a wild ride that was eventually blamed partially on high-frequency trading, computer programs called algorithms that automatically buy and sell financial instruments in much less than a blink of an eye.

Why should we risk our market stability with such rampant speculation? Spoiler alert: we don’t have to!

Right on cue to tamping-down on undesirable market behavior is an idea associated with Nobel prize-winning economist James Tobin, who called for a corrective tax on speculative trading that would  “throw some sand in the wheels” of the market to slow it down. Dozens of countries already have these taxes in place and the U.S. had a tax on Wall Street taxes from 1914 through 1965. Public Citizen has long advocated for reinstating a tax on Wall Street trades to protect consumers.

Not a Hollywood blockbuster, but another recent film, The Same Heart, also chronicles the rise of the high-speed trading ‘bot. However, the problem toward which the documentary film’s lens is primarily pointed is the horrible injustice of childhood poverty. But, instead of showing only the negative—the unthinkable hurdles of hunger, disease, and violence that billions of children face worldwide—it focuses on a possible solution: taxing Wall Street trades. The Same Heart makes the ethical and economic case for the wealthiest among us, the financial elite who make millions and billions of dollars in profit from financial transactions, to fund programs that invest in the world’s youth.

On September 27, at 1 pm in the Capitol Visitor’s Center, Public Citizen, in coordination with Media Voices for Children, which produced the film, the Child Labor Coalition, and the Congressional Progressive Caucus, is hosting an event called “Investing in our Future, One Transaction at a Time,” a panel discussion and screening of an excerpt of The Same Heart. I will be center stage for a dialogue with U.S. Rep. Keith Ellison (D-Minn.), filmmaker Len Morris, and experts from the Center for Economic and Policy Research, Communications Workers of America, the Institute for Policy Studies, and the National Consumers League. In addition to speaking about how the tens of billions in estimated yearly revenues from a Wall Street tax could benefit the next generation, I will outline how current legislative proposals to reinstate a tax on Wall Street trades to make markets less volatile and work better for average investors.

A fairer market does not have to be a celluloid dream. If we want to flip today’s script: the robbers being the banks themselves, bad guys costumed in pinstripes, never jail stripes, we need to take on Wall Street. The first step is making Wild West Wall Street stock market gamblers pay their fair share by taxing their trades at a fraction of a percent.

And, even if you’re not in DC to make the movie and panel event, you can still help set the scene for a legislative win. Please tell your U.S. Representative that you want her or him to be a hero and cosponsor the Putting Main Street FIRST (Finishing Irresponsible Reckless Speculative Trading) Act (HR 5745). If you’ve already done that, be a social media superhero and help spread the word about the Take on Wall Street fight by sharing this blog on Twitter with the hashtags #WallStTax or #TakeOnWallSt.

With your help, soon we will reach a critical consensus: no longer will we let the One Percent steal the show.

This article was originally published on The Hill.

Wells Fargo’s scandalous practice of secretly opening more than 2 million sham deposit and credit card accounts dragged on for at least five years.

How did Wells Fargo get away with it for so long?

stagecoach-5106_640A big part of the story: Wells Fargo contract provisions blocked consumers from suing the bank in court. It’s past time to prohibit the “ripoff clauses” that prevent consumers from enforcing their most basic legal rights.

Like most big banks and many other corporations, Wells Fargo buries ripoff clauses in the fine print of its customer contracts. These provisions, also known as “forced arbitration” clauses, prevent consumers from suing over wrongdoing in court and prohibit consumers from banding together in class actions. Instead, ripoff clauses force consumers to seek redress in private arbitration, on an individual basis.

So when lots of consumers have suffered small harms — as was the case with Wells Fargo — there’s nothing they can do. It’s generally not worth the time and money to bring a case individually, and there’s a disincentive to proceed in arbitration, where claims are decided by a private firm handpicked and paid by the corporation rather than a judge or jury. Effectively, banks and other corporations are free to rip off their consumers without fear of being held accountable in court.

The problem isn’t just that aggrieved consumers don’t have access to a remedy. Keeping cases out of court means abuses are kept out of the spotlight.

That’s exactly what happened with Wells Fargo, and why the abuses could go on so long.

Indeed, more than three years ago, a Wells Fargo customer named David Douglas sued in California, contending that the bank’s employees and branch managers “routinely use the account information, date of birth, and Social Security and taxpayer identification numbers … and existing bank customers’ money to open additional accounts.” Douglas alleged that branch managers opened at least eight accounts in his name and created fake business accounts under his name without his knowledge.

This case should have gone to court but was blocked by a ripoff clause. Douglas’s lawyers argued that an arbitration provision in a legitimate account agreement should not bar him from suing over a sham account he never agreed to open. However, citing recent 5-4 U.S. Supreme Court decisions, the judge held that the ripoff clause in the original agreement blocked him from suing Wells Fargo.

In 2015, another Wells Fargo customer, Shahriar Jabbari, tried to file a class action against the bank, claiming that employees hid fees, refused to close accounts on request, and forged signatures and addresses. Wells Fargo publicly denied these allegations. Again, the judge ruled that the ripoff clause in the original account agreement forced any unresolved disagreement into arbitration, and Jabbari’s class action was kicked out of court.

Had these early cases been allowed to proceed, others almost certainly would have followed, and Wells Fargo may have ended these pervasive abuses years ago.

Instead, it took until last week for the practices to be halted, and then only thanks to the efforts of the new Consumer Financial Protection Bureau (CFPB), the agency devised by Sen. Elizabeth Warren (D-Mass.) and adopted as part of the 2010 Dodd-Frank financial reform bill. State and federal regulators had notice of the problem at least as far back as 2013, when the Los Angeles Times first reported on Wells Fargo’s fraudulent accounts. Front-line Wells Fargo workers had drawn attention to the problem, too; in April 2015, at the bank’s annual shareholder meeting, Wells Fargo employees with the Committee for Better Banks submitted an 11,000-signature petition calling for an end to sales quotas that fueled fraud.

Private enforcement – individual lawsuits and class actions brought by harmed consumers — not only is a necessary complement to agency efforts, but it also often alerts agencies to the need for action.

Governmental agencies don’t have the resources to police every instance of fraud. And these agencies frequently face industry smears and congressional posturing that halts or slows their ability to act.

When consumers are blocked from suing, it takes longer for agencies to become aware of a problem and is much more difficult for them to gather evidence and build a case — particularly when companies use forced arbitration to keep victims silent.

The solution: Do away with ripoff clauses. The CFPB has proposed a rule that would end the worst ripoff clauses in the financial arena, restoring consumers’ right to join together in class actions to hold banks accountable for predatory behavior.

The big banks are trying to block the rule, but the Wells Fargo scandal shows exactly why the CFPB should prevail.

Weissman is president of Public Citizen. Donner is executive director of Americans for Financial Reform.

Just some of the over 700,000 signature delivered to Mylan

Just some of the over 700,000 signature delivered to Mylan, Photo Credit: Ed Grystar W. PA. Coalition for Single Payer Healthcare

By Sean Grant

Protesters on Tuesday delivered petitions to Mylan’s corporate headquarters just outside of Pittsburgh demanding that the company end price gouging EpiPen users, they did not expect a warm welcome. They knew beforehand that they would not be allowed to approach the building. In front of TV cameras, Mylan accepted the petitions on a wheeled cart.

But Mylan representatives who collected the petition signatures – gathered by Public Citizen, MoveOn.org Civic Action and others – offered no comment to the media, raising the question of whether the company will heed the call of the nearly 700,000 Americans who signed the petitions. The public clearly is outraged at Mylan’s raising the price of EpiPens by more than 500 percent since 2007 for no apparent reason other than greed.

Protesters were not allowed to enter Mylan's visitor entrance at their building

Protesters were not allowed to enter Mylan’s visitor entrance, Photo Credit: Ed Grystar W. PA. Coalition for Single Payer Healthcare

Before the petition delivery, Mylan twice announced new measures to appease the public, but these weak attempts at appearing contrite only further enraged people. As Public Citizen President Robert Weissman stated, “It’s not enough to offer coupons and it’s not enough to offer an overpriced generic version of its own branded product. The company must roll back its unjustified and outrageous price increases.” Read those press releases here and here.

As the petitions were rolled away on dollies to chants of “people over profit,” attention shifted to Mike Laffin, a member of Mylan’s communications team, who was sent out to deal with the reporters clamoring to ask questions. Laffin, however, could provide nothing more substantive than “Any other questions need to be directed to our communications team or customer service.” He repeated the phrase several times, perhaps most forcefully when one reporter asked if Mylan had any plans to lower the price of the EpiPen further.

Considering how ineffective the customer service department has been so far, referring reporters to it – by a live person from the communications department – doesn’t seem like the brightest PR move. But the company keeps making missteps, it seems. It is imperative Mylan finally listen and take substantive action.

View a video of the petition delivery 

 

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