ThePopTort

HuffPo Repost: FTC May Make it Easier for Used Car Dealers to Sell Recalled Cars

With the nation so focused on polls these days, I thought this one might be of interest if you drive a car, drive in a car, are ever on the road with a car, i.e., pretty much everyone. The poll says 9 out of 10 Americans believe that car dealers shouldn’t sell used cars with safety defects. Nine out of 10 also believe that if a dealer says a car has passed a “125-point inspection,” the car should be safe and without safety defects.

My question is - who on earth are the 1 in 10 who disagree with that? Turns out, they probably work for Federal Trade Commission.

The FTC, whose tag line is “Protecting America’s Consumers,” has decided to side with the corporate lawyers and executives at General Motors and two used car chains, agreeing to a legal settlement regarding the sale of cars under safety recall. Specifically, the proposed settlement would not only allow them to sell used cars under safety recall, but also allow them to say these cars are “safe” and “repaired for safety” and passed a “rigorous inspection.” (Sort of like permitting skydiving companies to assure customers that the parachute rig is safe even though there’s no parachute.) Perhaps the FTC needs a new tag line.

Keep reading.

What Elections? Let’s Talk About Supplements!

Spiritual guru and Oprah BFF Eckhart Tolle, author of The Power of Now: A Guide to Spiritual Enlightenment, says, “now is all there ever is; there is no … future except as … anticipation in your mind.”  What a relief!  That means I can get rid of all of my dreadful “anticipatory” thoughts about the kind of country we might have tomorrow and instead focus on dietary supplements! Quite the mental detour.

You know Herbalife, right?  It's that "global nutrition and weight management" company, which “recruits individuals as distributors who sell its products to friends, family, and other consumers.” This pyramid-scheme sounding business model led the company this week to agree to pay $15 million to settle a class-action lawsuit for, well, running a pyramid scheme. Writes Slate,

The allegation that Herbalife (founded in 1980) is a pyramid scheme is not limited to this case. An Federal Trade Commission investigation of the company is ongoing (Herbalife just hired a former FTC official to run its legal compliance operations), as is a public relations campaign by hedge funder Bill Ackman, who has said he's shorted the company's stock because he believes its sales system involves several scams. …

One irony in all of this, of course, is that even if there are millions of Herbalife fans paying for and using the company's "Cell Activators" and "Male Factor 1000" pills, those people might just be paying for the placebo effect. As a manufacturer of supplements, Herbalife's products are not required to undergo Food and Drug Administration–regulated clinical trials, and are sold with the warning that they are not intended to “treat, prevent, or cure disease.”

The failure of the FDA to protect supplement consumers speaks loudly for the need for class actions, but unfortunately the lack of regulation in this area also means that cases can get easily tossed. For example, also this week, “a federal judge dismissed a proposed class action against SanMedica International for its so-called human growth hormone booster” which the plaintiffs bought “after seeing ads for its 'SeroVital' product on the Dr. Oz show and in Shape magazine.”

Even though SanMedica made all kinds of crazy claims, the judges granted SanMedica's motion to dismiss (with leave to amend by Dec. 1.) 

Notes Courthouse News, “Diet supplements, as opposed to drugs, are virtually unregulated in the United States, unless consumers can show they contain regulated drugs. Congress has refused to regulate them.” 

But perhaps there’s hope on the horizon!  Writes The Hill today,

The Food and Drug Administration is moving forward with new recommendations to the manufacturers of dietary supplements that have drawn increasing scrutiny for their miracle weight loss claims.

The FDA already prohibits pharmaceutical companies from making misleading claims about their dietary supplements. To help manufacturers comply with these rules, the agency has issued voluntary guidelines for companies making dietary supplement claims.

The FDA on Monday requested public comment on the guidelines.…

This comes as Dr. Mehmet Oz, who hosts "The Dr. Oz show," has been under pressure from federal regulators and members of Congress for endorsing dietary supplements that make controversial weight loss claims, despite what critics say is a lack of definitive scientific evidence.

The public has 60 days to comment on the new guidelines.

Besides voting, do that today.  No use sitting around worrying.

Better Watch Out for the Other Guy’s Car

When you live in the city with the most extensive public transportation in North America, you tend to pay more attention to stories like cutbacks on the M104 bus route. But we’re not immune from the risks of highway transportation. Far from it.  We do get out!  But I’m increasingly thinking, maybe we shouldn’t.

It’s not just the speeding truckers on the New Jersey Turnpike. Or the fact that car rental companies (which lots of us NYC folks rely upon unless you can afford storing your car in a garage that costs more than an apartment) and used car dealers are, by law, still allowed to rent unsafe, recalled cars.

It’s ALL the dangerous cars out there, whether I’m driving one, or the guy in the next lane is.  The news just won’t stop!  Here are three new stories that really concern us:

Used Cars:  CarMax is “the nation’s largest used-car retailer.”  But as noted by 11 consumer groups in a petition just filed with the Federal Trade Commission, “CarMax does not fix vehicles that have been recalled before it sells them, even though the retailer’s ads promise that the vehicles have had a rigorous quality inspection.”

Also weighing in is U.S. Senator Charles E. Schumer (D-NY), who wrote to the FTC, “It is bad enough that used-car dealers are not required by law to fix a safety recall problem prior to selling the recalled vehicle to a consumer.  Compounding the safety risks with misleading and deceptive advertising and sales practices only further endangers the safety of used-car customers and everyone who shares the roads."

Air Bags and More Recalls: Writes the New York Times, “Recalls related to air bags have affected at least 10 million of the more than 30 million cars recalled in the United States so far this year, according to a New York Times review of regulatory records.  On Monday, seven additional automakers said that they were recalling more than three million vehicles worldwide because their air bags, made by the Takata Corporation, could rupture and send debris flying inside a car.  With this new massive recall, “the auto industry has broken the U.S. annual record for safety recalls in less than half a year.”

NHTSA Still Not Paying Attention.  Yesterday, Good Morning America did a fantastic piece with a couple of real heroes in the auto safety movement: Lance Cooper, the attorney whose persistence on behalf of the parents of GM crash victim Brooke Melton broke the GM ignition switch scandal, and auto defect researcher Sean Kane.  Here’s what Cooper and Kane found: There are 15 serious auto safety problems, including one involving the nation’s best selling car, the Ford Focus, that have had an unusual number of complaints reported to NHTSA, but which the agency is doing nothing about. The report noted, “there is no certainty” that any of the vehicles on the list had a safety-related defect, but said the unusual number of complaints warranted investigation.

“These are issues that are trending that are outside of the ordinary that need to be examined,” said Sean Kane, whose non-profit the Safety Institute, was hired to prepare the list.

In addition to the accident reports the manufacturers turn over, other complaints filed directly with NHTSA reported complete loss of steering control.

“I almost side-swiped cars in other lanes trying to maintain control,” wrote one Focus owner from Florida.

“I had to hold on for dear life trying to keep it in the lane,” wrote another owner in Oregon.

NHTSA is pooh-poohing the whole thing. Maybe I should stick to the subway, for now.

Credit Reports and the Courts

The Federal Trade Commission hasn’t always done a great job monitoring the sleazy industries that can financially ruin our lives, but lately, under the leadership of the soon-departing Jon Leibowitz, it’s been doing a pretty good job. Pay day loans.  Identity theft.  Mortgage relief scams. 

And lately, the FTC has been up to its eyeballs monitoring the credit reporting industry. In 2010,  the agency issued new rules about those deceptive and often irritating “free credit report” commercials, advertisements and websites. They aren’t.  Free, that is. Wish that were the only problem.

Today, the FTC released a new study finding that when it comes to the three biggest credit bureaus - Experian, Equifax and TransUnion, “As many as 42 million consumers have errors on their credit reports, and around 20 million have significant mistakes.” Says the FTC, “One in four consumers identified errors on their credit reports that might affect their credit scores,” but only “[o]ne in five consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed, on at least one of their three credit reports.”

So as beneficial as FTC monitoring is, sometimes it’s not enough. And that was made clear in last night’s 60 Minutes piece about how nearly impossible it is to get a credit reporting agency to fix a mistake once they know about it, sometimes with ruinous consequences for the consumer. And that’s where lawsuits and state Attorneys General can step in.

First the lawsuits. Judy A. Thomas, who had a great credit history, was denied car loans, credit cards, etc. etc. because her credit reports confused her with someone named Judith Kendall who had a lot of debt. It shouldn’t have come to this, but until she took those credit agencies to court, nothing got resolved. 

As for AG’s, back in 1996, Congress amended the Fair Credit Reporting Act (FCRA) to include state enforcement provisions. (See more in this law review article.) And last night’s piece, based on a series that first appeared in the Columbus Dispatch, showed how valuable a move that was. Writes the Dispatch:

Ohio Attorney General Mike DeWine [who appeared in the 60 Minutes piece]… and at least 24 other state attorneys general launched an investigation into the three national credit-reporting agencies after a Dispatch series Credit Scars, exposed systemic flaws in their operations that prevent consumers from correcting costly mistakes.

DeWine has discussed the problems with officials from Experian, Equifax and TransUnion. No solutions have been proposed yet, he told The Dispatch on Friday, but his work with them will continue…

Without that power, these 24 state AG’s would have no tools to help their own citizens, if only to try to push Congress to strengthen the federal law. This is the kind of state power that groups like the U.S. Chamber of Commerce and the American Tort Reform Association want Congress to strip away.  Seems they don’t want to sully our federalist system with too much state power. … Oh wait.