It's time for consumer issues to get attention

Herb Weisbaum • Profile • E-mail

Congress is back in session and lawmakers have a lot on their plate right now. Clearly, an economic stimulus package tops the list.

But a number of important consumer issues that made headlines in 2007 are still pending and need to be addressed.

Last year, Congress made a lot of headlines by holding hearings on some of these hot-button issues — from credit card crisis to food safety. Was it all a case of grandstanding? Was anything accomplished?

Well, one thing is for sure. The problems have not been resolved.

I spoke with some of the top consumer advocates in the country to find out what tops their legislative agendas.

Mortgage reform
The mortgage meltdown is far from over. Many more Americans will lose their homes in 2008.

In early December, the Bush administration worked out a deal with the mortgage industry to freeze the low “teaser” rates on some subprime mortgages for five years. But according to the Associated Press, only 250,000 people will get a rate freeze, while 3.5 million home loans could go into default during the next two-and-a-half years.

“A lot of lenders used predatory and deceptive practices – lies and misrepresentations – to get people into these loans,” says Linda Sherry, director of national policies at Consumer Action. Sherry wants Congress to help those who face foreclosure and pass legislation to prevent a similar mess from happening again.

Consumer Action says Congress should change the bankruptcy code, so people who file for Chapter 13 bankruptcy protection (where you pay back some of what you owe) can keep their home. Right now, a judge can let them keep a vacation house or a boat, but not their primary residence. That’s absurd!

For those of you facing foreclosure and are looking for help, visit this site.

Credit cards
“We’re looking for Congress to rein in some of the traps and tricks that many Americans are fed up with,” says Travis Plunkett, legislative director for the Consumer Federation of America.

Last year Congress summoned the leaders of the country’s biggest banks to Capitol Hill and took them to task for what critics call punitive fees and unjustified interest rate hikes. But so far, no legislation has been passed.

One of the most onerous practices that should be outlawed is called universal default. You can have a perfect payment record with a credit card company, but if you are late paying another bill or your credit score slips for some reason (maybe you have big medical bills) you can get hit with the default interest rate – as high as 30 percent a year.

Several big banks say they’ve gotten rid of the universal default penalty. If they have, this action is voluntary, which means it can return at any time. Congress needs to ban this unfair practice to prevent every credit card issuer from using it.

Lawmakers also need to put an end to credit card contracts that let the bank change the terms of the deal – boost penalty fees or change the interest rate – at any time and for any reason – with just 15 days notice. This is blatantly unfair.

Food safety
Congress tends to react to a crisis. And lawmakers did respond to last year’s headlines about tainted food from China. Hearings were held and some important bills were introduced. But not a single one has passed.

A huge portion of the U.S. food supply is imported, and relatively little is inspected before it goes to market.

“Right now, we have an open door policy for most food products coming into the country,” says Caroline Smith DeWaal, director of food safety at the Center for Science in the Public Interest.

Clearly, more needs to be done to catch potentially harmful food imports before people get sick. Regulations are also needed to insure the safety of the food from American farms.

“In terms of regulatory action, we’re pretty much where we were when the spinach outbreak occurred in 2006,” says Smith DeWaal.

FDA has issued new safety guidelines for farmers, but these aren’t binding. Many farmers and processors have implemented tougher food safety programs. But again, these are all voluntary. CSPI wants Congress to require farmers to write plans that would insure the safety of their farming practices.

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