Consumer Protection & Corporate Accountability

Recently, in New Jersey, Governor Jon Corzine's administration proposed rule changes that threaten to prevent the public from accessing key environmental information about the state's most potentially hazardous facilities.  Advocates say the environmental information that would be withheld would block public access to information that estimates how many people may be in harm's way if a toxic chemical disaster occurred at 12 sites regulated by the state, as well as additional information for 85 New Jersey sites under federal oversight.

Working families struggling to make utility payments are feeling the chill as companies shut off their gas and electricity. Shut-offs are up across dozens of states, particularly Michigan where unemployment is high, with a 22 percent increase in the number of families left without heat or electricity. The state's Heating and Warmth Fund, which helps those in need pay delinquent heating bills, has seen a record 42 percent increase in people applying for heating payment assistance.

With Governor Schwarzenegger's approval of AB 97, California became the first state to ban the use of trans fats in food preparation at restaurants and bakeries, achieving a key public health goal.  Trans fats, or partially hydrogenated oils, are used in numerous prepared and packaged foods like French fries, margarines, crackers, and doughnuts.  Trans fats significantly increase consumers' risk of heart disease by spiking so-called bad cholesterol and decreasing good cholesterol.  Several cities, including New York City, preceded California with their own bans, but the California action will increase the likelihood that other states will follow suit.  Under the California law, restaurants must discontinue their use of trans fats by 2010 and bakeries must comply by 2011; fines will range from $25 to $1,000. Packaged foods are exempt.

The headline above is a quote from former West Virginia Supreme Court Justice Richard Neely, describing what his role was as an arbitrator at the National Arbitration Forum (NAF), a for-profit company hired to enforce mandatory arbitration clauses for credit card consumer loans.  "NAF is nothing more than an arm of the collection industry hiding behind a veneer of impartiality," says Richard Neely.

In a devastating expose by BusinessWeek, Neely and other former arbitrators describe an arbitration system stacked completely against consumers-- a system where creditors win 99.8% of all disputes involving companies ranging from Bank of America to Sears to Citgroup. Arbitration clauses buried in the fine print of credit card offers means consumers lose the right to have disputes decided in an independent court and instead are forced into corporation-selected arbitration firms.

Giving into corporate efforts to protect banking interests, Minnesota Governor Tim Pawlenty vetoed SF 3396, which would have put a temporary hold on foreclosures while still requiring borrowers to make payments on their loans.  The bill would have required homeowners with a sub-prime or negative amortization loan to pay either 65 percent of the payment owed when the loan defaulted, or the minimum monthly payment when the mortgage was first created, whichever is less, for a one-year foreclosure deferment period.  The bill passed both chambers of the Minnesota Legislature with a wide margin, only to be vetoed (part of Pawlenty's record number of vetoes for a single session).  In the meantime, home foreclosures are projected to increase 39 percent this year in Minnesota, with one out of every 31 Minnesota households experiencing a foreclosure between 2005 and the end of this year.

Over the past decade, elections for state high court seats have gone from sleepy, mildly partisan affairs to major political battles with huge campaign spending, millions in independent special interest advertising, and misleading and negative attacks in the forefront.  TV advertising is now apart of virtually all (91%) contested state supreme court elections, up from about one in five elections in 2000.  And in 2006 business groups were the source of more than 90% of those ads.  Business groups are also the source of almost half of all campaign contributions in these races.

Since our last Dispatch on toxic toys, several states have moved comprehensive legislation against toxics in children's toys and products.

Faced with total and continued inaction on the federal level, Maryland enacted a series of emergency measures earlier this month to combat the foreclosure crisis in the state.  

While the financial crisis developed over a number of years in the subprime mortgage sector, federal regulators were asleep at the wheel as greedy lenders often took advantage of working families.  Worse, when states tried to step in with new state policies to tighten oversight of predatory lenders, federal officials blocked those state consumer protections, making the effects of the meltdown even worse for families. 

James Madison, one of the main drafters of the Constitution and the fourth President, wrote that, "Trial by jury in civil cases is as essential to secure the liberty of the people as any one of the pre-existent rights of nature." Yet, today, consumers, employees and victims of corporate negligence are increasingly being denied access to justice through the courts.