Consumer complaints to federal and state agencies exploded this year, fueled by a global crisis that financially stressed millions of Americans and disrupted thousands of businesses’ normal operations.
Now state legislators and consumer advocates across the country are pushing for permanent protections to address the gaps in consumer law exposed by the pandemic.
The COVID-19 crisis has put Americans at greater risk of defaulting on loans or falling behind on rent. State consumer protection offices and attorneys general have faced a deluge of reports about price-gouging, fake COVID-19 cures and online payment scams. The Federal Trade Commission has logged nearly 275,000 complaints from consumers, many of them seeking millions of dollars in refunds for canceled trips and services.
Officials in all 50 states and Washington, D.C., have taken emergency action to protect consumers during the pandemic.
As those temporary protections expire, consumer advocates in many states want to enshrine them in law. There’s certainly precedent for such a shift: Some of America’s most significant consumer protections were enacted after the Great Depression and the Great Recession.
At least 23 states and D.C. have enacted or are considering new consumer protection laws because of the pandemic, according to a database maintained by the National Conference of State Legislatures.
‘Not easy bills to pass’
Maryland is one of several states considering changes to its eviction, foreclosure and debt-collection systems. A state recovery task force is likely to push for new protections against eviction, including an extended timeline for the process, and a legal right-to-counsel for tenants.
The panel also is considering new regulations to limit wage garnishment and a requirement that creditors pursue an income-based repayment plan before a bill goes to collections.
Similar debt-collection changes are under discussion in Massachusetts and Texas. With the backing of more than 40 civic and community groups, Massachusetts has proposed a Debt Collection Fairness Act that would limit wage garnishment for debtors and reduce the possible window for collecting on a debt.
“I think that, despite the federal CARES Act providing some stimulus and financial support to Americans, we saw that in reality the American social safety net has so many gaps at both the federal and state level,” said the bill’s sponsor, state Sen. James Eldridge, a Democrat. “We want to change that reality for families in Massachusetts.”
In Texas, advocates are also seeking to limit debt collectors’ ability to seize funds from debtors’ bank accounts — a long-standing issue that became more visible when indebted Texans scrambled to protect their federal stimulus payments, said Ann Baddour, the director of the Fair Financial Services Project of Texas Appleseed, a nonprofit public interest group.
But such a measure would face stiff opposition from creditors and business interests in the state, which already protects paychecks, homes and a wide variety of personal assets from debt collectors, said Craig Noack, a longtime creditors’ rights attorney.
Scams and cancellations
Improvements to other areas of consumer law also have been explored, though advocates say they’ve seen far fewer state-level bills on issues such as scams or airline ticket cancellations. One notable exception is New York’s recent membership-cancellation bill, which makes it easier for consumers to zero out ongoing or automatically renewing contracts, such as subscription services, equipment rentals and gym memberships.
In many cases, there is no legislation because existing laws already govern these issues, said Spencer Weber Waller, the director of the Institute for Consumer Antitrust Studies at Loyola University Chicago School of Law. Most states already ban price-gouging, for instance. In other cases, such as online payment scams or airline refunds, states have been limited by concerns about jurisdiction.
Advocates also have called on the federal government to cancel student loan debt, increase funding for utility assistance programs and enact a permanent, national interest-rate cap for consumer loans.
“A lot of this has been driven, frankly, by consumer complaints — about abusive debt collection, about landlords who have not really abided by eviction moratoriums, about refunds for travel and vacations,” said John Breyault, vice president of public policy at the National Consumers League, a consumer advocacy group based in Washington, D.C.
“The question now is: Are we going to see a dramatically different consumer protection landscape coming out of COVID than we did going into it?”
