Nov. 17, 2006 at 9:00 AM ET
Consumer protection has taken it on the chin during the recent Republican rule, often shoved aside in the interest of laissez-faire economics. As a result, we've seem anomalies like 30 percent credit card interest rates, virtually no enforcement of truth in advertising laws, the growth of powerful data collection companies, very little protection against identity theft, and so on.
One might assume that last week's election results and the dramatic shift toward Democratic influence might signal a shift in favor of consumers and away from big business. But that might be a bit optimistic. Consumer protection advocates have mixed, wait-and-see feelings about the upcoming 110th Congress. Here’s a look at Red Tape-related legislative work that the new Congress might face.
Robert Manning, author of “Credit Card Nation” and maker of the documentary “In Debt We Trust,” is pessimistic that the incoming Congress will have the courage to address the issue of high credit card interest rates. Outside of possible limitations on universal default -- the crazy practice that allows credit card issuers to raise your rate if you are late paying some other, unrelated bill -- Manning doesn't think there will be any significant consumer debt laws introduced in advance of the next presidential campaign.
"There isn't a senior member of Congress willing to become a lightning rod on this issue who has a secure enough position to incur the wrath of the financial services industry," he said. "It's a sad story."
Consumers Union legal expert Gail Hillebrand is a bit more positive. She notes that Sen. Christopher Dodd , D-Conn., who is expected to chair the Senate Banking Committee, has introduced consumer-friendly credit card legislation in the past and may look favorably on new credit laws.
"I think credit card issues will be in play," she said. "Every year we see good reform bills introduced and never moved. ... It's time to do something about credit cards."
Bankruptcy, Net Neutrality
Consumers shouldn't anticipate the unwinding of the bankruptcy bill, however. That law made it easier for lenders to collect debts and harder for consumers to erase them, even under the most trying circumstances, such as devastating medical bills. After all, even Sen. Hillary Clinton, D-N.Y., declined to vote against it the first time, choosing instead to abstain.
Democrats may decide to take on Net Neutrality, one of several tech-related issues left twisting in the wind by Republicans. Last session, Democrats tended to support the idea of neutrality as it was presented in the various upgrades to the omnibus telcommunications bill Congress considered last year, but it's not clear what neutrality will look like in any new legislation, or if Democrats will maintain their support for it as the majority party.
Telecommunications firms like Sprint want to charge heavy users extra fees, but Web sites like Craigslist and Google want none of that. Telcom bills in both the House and Senate stalled half-way through the legislative process in the last session. Democrats will have to decide if, and how to support Net neutraility legislation, which some say will determine the future of the Internet as much as any law Congress could pass.
That includes extension of the Internet as a tax-free zone, another measure the Democrat-controlled Congress is likely to face.
Data leaks, pretexting, check-clearing
Hillebrand also hopes Democrats will be able to push through data breach notification legislation, a law that might be called "The ChoicePoint Bill." Since the string of lost data stories that began in 2005, about a dozen laws have been proposed to force companies to disclose data losses to consumers. But most would actually have eased the burden placed on companies by state laws, and none was enacted.
A law that would have made it illegal to lie in order to obtain someone else's phone records, a practice called pretexting, also stalled in the last session, despite overwhelming, non-partisan agreement on the issue. While Congress was debating, the infamous Hewlett Packard spying scandal unfolded before the public, underscoring the need for anti-pretexting legislation.
PrivacyToday.com publisher Rob Douglas said he hopes the new Congress will take quick action on that. "We need finality on this issue," he said.
There are a number of other consumer-friendly issues Hillebrand hopes will get an airing in the new Democratic Congress, including mundane but critical issue of check clearing times. Banks can still take up to five days to clear a check and release funds available to depositors, even though the advent of Check 21 (The Check Clearing for the 21st Century Act) allowed banks to clear funds for themselves much more quickly.
"It's been 16 years since the period (consumers had to wait) was shortened," she said. "Everything else has speeded up during that time." A Federal Reserve study on the issue of check clearing is due in February, and Hillebrand expects action soon after.
Identity theft protection, privacy
The new Congress also may revisit laws that would help consumers deal with identity theft. A proposed federal law that would give ID theft victims the right to freeze their credit reports stalled in the last Congress, in large part because it, too, offered reduced protections compared to several state laws and wasn't supported by consumer agencies.
Consumer advocates would welcome a new provision that didn't interfere with state laws, and would be similarly enthusiastic if Congress was to review the Fair and Accurate Credit Transaction Act of 2004, which updated the Fair Credit Reporting Act. That law also preempted several state ID theft protection laws. Hillebrand, however, is skeptical that Democrats are willing to open that Pandora's box.
Douglas is also skeptical that Democrats will attempt to take on the larger issue of privacy -- perhaps through a comprehensive updating of the 1974 Privacy Act. Two Democrats -- Rep. Ed Markey of Massachusetts and Sen. Bill Nelson of Florida -- have been among the most vocal privacy advocates in Congress, but both are expected to support piecemeal solutions, such as the anti-pretexting legislation, or legal clarifications regarding Bush administration surveillance strategies like warrantless wiretapping, he said.
Still, Douglas is hopeful that the change in Washington might bring welcome progress on privacy-related issues that had otherwise hit a dead end.
"My hope is that these issues may get a fresh look...that we get a fresh set of eyes on these issues," Douglas said.