The Corporate Observer : Washington D.C. Class Action Lawyer & Attorney : Steven Berk Law Firm : Consumer Protection, Corporate Abuse : The Corporate Observer Blog

In many ways, the days of Tammany Hall and Boss Tweed are deep in the rear view mirror.  Politics is surely more transparent these days.  There are many more stakeholders to be reckoned with:  unions, non-profits, civil rights organizations and foundations just to name a few.  But thanks in part to the Supreme Court, large corporations  will dominate the game.   And oh are they good at playing the game.  They know where to focus and can contribute directly to the campaigns of congressional members whose job it is to regulate them and their industry.  A conflict of interest to be sure; but it’s legal and just part of the game.

In last Sunday’s editorial, the New York Times detailed the dubious fundraising ethics of certain members of congress. Chief among these ethical offenders are those esteemed members of the Financial Services Committee. These powerful congressmen, just days before votes on a seismic  regulation overhaul, continue to plan and throw together fundraising events for officials of the very corporations they will regulate. Representatives of the financial industries come from all over the country to meet with elected officials, to dine, and to share their two cents – more like millions of cents.  Why now? Because money is flowing and campaigns are ever more expensive. 

The banks and their lobbyists sure know how to play the game.  Public outcry may be loud for now, but memories are short.  Behind the scenes – the lobbyists are getting face time and putting in all those provisions and loop holes that water down high profile legislation.  In the end, we are right back where we started before a financial collapse (of our own making) was days away from igniting a worldwide economic catastrophe. 

Private interests regularly flood congress with money, biased information, and campaign contributions – this is nothing new. But we should have learned something from being on the brink.  Congressional leaders must decline dinner dates with financial heavy-hitters.  It’s time instead to soberly contemplate real reform,  Indeed, what we really need is a sea change in the way we value risk and reward our executives.  Those hard issues cannot be contemplated over gourmet dinners with lobbyists and their clients sipping $250 bottles of wine.  Left unfettered, the banks are winning and Main Street  is destined to lose again.

Assisted by Zachary Kady

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Here is a Federal Agency willing to walk the walk.  The FTC recently announced that Countrywide, one of the nation’s largest mortgage lenders and now a member of the Bank of America family was fined $108 million for improperly pursuing foreclosures and charging excessive and unfair fees to lenders being thrown out on the street.  Where is the pity?  How bout showing a little humanity. Nope.  Instead, Countrywide took advantage of folks that who had no resources to fight back.  As just an example or two, Countrywide’s egregious action included fees for  a $300 lawn mowing and the approval of a trustee’s fee that exceeded the going rate by more than 400%.   Shocking ... Not.

But no need to dwell on Countrywide’s disgraceful, dishonest, shameful (insert your own sentiment here) behavior.  There is a bright side.  The fighting and fit FTC; going to bat for the American public. As Gretchen Morgenson rightly pointed out in her column on Monday, the wheels of justice have been turning painfully slowly but we at Berk Law are delighted to see justice any time – even when it shows up late to the party.

So, three cheers for the FTC for reaching this settlement.   No doubt thousands of aggrieved homeowners will be made whole. The United States Trustee, the investigative arm of the Department of Justice that assisted the FTC in this matter plans to look into similar predatory practices committed by other now-defunct mortgage-lending banks.

There are undoubtedly scores of lenders whose predatory actions, despite harming thousands of citizens, have gone undetected and unpunished. We hope that investigations and results such as this recent settlement with Countrywide scare some sense into banks and other financial institutions who are in a position to make mischief for homeowners while lining their own pockets.

 

Assisted by Zachary Kady

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According to a June 7^th Businsessweek article, one hedge fund group has spent $1.4 million lobbying congress in the first quarter of 2010.  That’s a lot of lobbying.

They are not alone.  Managed Funds Association, an industry trade association, whose members include Bank of America Merill Lynch, Bank of New York, Barclays Capital, Citi, Goldman Sachs & Co., JP Morgan Chase & Co., and many more have increased its spending by over half a million dollars from the same quarter last year. Why?

Surely not to protect consumers; nor to put more strident controls and oversight on a financial services industry that brought us within an eyelash of a worldwide depression. 

 No.  Their singular goal is to stop reform that Main Street so desperately needs. The newly passed Senate and House financial reform bills, presently in reconciliation proceedings, signal the beginning of a material shift towards proper regulation of the casino, Wall Street has become.  These reforms include a new Consumer Financial protection Agency, increased rewards for whistleblowers, and the end of predatory lending practices like zero-down sub-prime mortgages.  Wall Street wants none of that reform.

As we’ve reported before, Wall Street doesn’t get it – or perhaps more correctly – they do get it. They realize memories are short and lobbying dollars can make a difference.  A big difference; so they are playing the game.   And playing it well.

The only way Main Street can complete must be through their role as the collective customers and shareholders of Citibank, Bank of America and Goldman Sachs.  They must vote with their feet and demand that management of these firms limit spending on lobbying and finally recognize the need for regulation and stability in the financial markets.  Proxy battles, sharp attention to management spending and accountability can be a very  

And the government must step up enforcement under current regulations and rules.  They can no longer take a laissez faire approach to the Captain’s of Wall Street.  It’s time for Eric Holder, Mary Shapiro and Sheila Baird (check FDIC) to roll up their sleeves and go after every single violation.  Zero tolerance.  That’s what Wall Street might understand.  That’s what will begin to foster change, stability and growth.

Assisted by Zachary Kady

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What Can We Learn From Tobacco and the Smoking Industry?

Tobacco Master Settlement Agreement (MSA)

The Tobacco Master Settlement Agreement (MSA) is a 1998 agreement between the four major US tobacco companies and the Attorneys General for 46 states. The case settled the tobacco companies’ Medicaid suits and exempted them from private tort liability caused by tobacco use. In exchange, the companies agreed to modify marketing and advertising techniques and to pay states for medical costs that resulted from smoking-related illnesses. Money also funded anti-smoking groups, like the American Legacy Foundation, which funded the aforementioned The Truth campaign. Lastly, the settlement broke up tobacco groups like the Tobacco Institute, the Center for Indoor Air Research, and the Council for Tobacco Research. In total, the tobacco companies agreed to pay at least $206 billion over 25 years.

There is lots of criticism of the MSA. In 2004 in The New England Journal of Medicine, Dr. Stephen A. Schroeder wrote: "Although U.S. smoking rates are slowly declining, progress toward that end [decreasing smoking] would be faster if federal policymaking matched both the rigor of the scientific evidence against tobacco use and the resolve of antitobacco advocates."[1] The National Cancer Institute said the MSA was an "opportunity lost to curb cigarette use."[2]

So is a settlement like the MSA enough? While there are some positive components of the settlement, there are also some areas where much room is left to be desired. One of the desired outcomes of the litigation against the tobacco companies was to reduce the power of the industry and its influence and grip over current and potential smokers. However, the settlement does not fully achieve this. In order to truly enact meaningful change and to make tobacco companies change policies, the settlement should have not let those companies off the hook in terms of Medicaid lawsuits and private tort liability.

Perhaps this is where tobacco litigation went wrong. Indoor tanning is often compared to tobacco. As Representatives Maloney and Dent said, indoor tanning is the cigarette of our time. Last time, tobacco litigation was incomplete and deficient. This time, it doesn’t have to be.

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The Impact of Pop Culture

Societal and cultural pressures have constructed strict standards and ideals of physical appearance and beauty. Idealized images of women construct unrealistic norms about how a woman should appear and be. Pop culture is the greatest source of these idealized images, from movies to magazine covers to models. In pop culture, the ideals are expressed visually and are distributed on a mass level—thus, their impact is profound. 

Pop culture ideals of beauty have disproportionate implications for women and girls.[1] For women, more so than men, physical appearance is a major component of personal identity. Thus there is greater pressure for women to fit the physical ideals they see celebrated in pop culture and American society. 

Young women are the most vulnerable group to services like indoor tanning, which are largely used in order to achieve certain beauty ideals. Young women are the highest percentage of indoor tanning customers[2], in part, because they are the most deeply affected by cultural standards of physical appearance.[3] As a result, indoor tanning can and should be viewed specifically as a gendered and generational problem. 

Cultural Messaging

There needs to be a greater amount of what I would call “cultural messaging” that denounces indoor tanning as dangerous and undesirable. The American public is familiar with anti-smoking and anti-drinking campaigns. The TRUTH campaign[4] and organizations like MADD (Mothers against Drunk Driving) are well known. 

There are some examples of pop culture movements that seek to resist the tanning phenomenon. Cosmopolitan Magazine has been involved with indoor tanning regulation. Editor-in-Chief, Kate White, joined Representatives Maloney and Dent when they introduced the Tanning Bed Cancer Control Act. In 2006, Cosmo launched a “Practice Safe Sun’ campaign and partnered with ABC to do an undercover investigation of tanning salons. In 2008, fashion designer Marc Jacobs joined with celebrity friends to launch an anti-tanning campaign called “Protect the Skin You’re In.” The Skin Cancer Foundation has a campaign called “Go With Your Own Glow.” Unfortunately, these groups are too few in number, and are not very far-reaching.

Assisted by Jessica Began

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There are a variety of educational programs aimed to shape youth behavior around drugs and alcohol. DARE (Drug Abuse Resistance Education) is an international education program that teaches students about the risks associated with drug abuse, including tobacco and alcohol products. In 1994, the Centers for Disease Control and Prevention (CDC) published a widely used report, “Guidelines for School Health Programs to Prevent Tobacco Use and Addiction.” We do not see similar programs that target indoor tanning. Young kids do not grow up to inherently understanding that indoor tanning is dangerous. They do not receive foundational education about the risks and consequences. Instead, they are left to navigate the benefits and costs among voices that come from pop culture, the indoor tanning industry, and their peers. In addition, one of the greatest problems facing successful public education and awareness of the risks of indoor tanning is the messaging in publications that come from the tanning industry. The ITA denies the claim that there is a proven link between indoor tanning devices and melanoma rates. Moreover, it insists that indoor tanning can actually be healthy, because: 1) UV rays emit Vitamin D, which is good for you; and 2) indoor tanning devices allow exposure to UV rays to be regulated in a safe and controlled environment.

When these conflicting messages pervade public discourse on indoor tanning, the message is muddled. Those individuals who are not well informed on the issues may believe the messages coming from sources like the ITA. At the very least, they may justify their own decisions to indoor tan partially based on the potential that the ITA is the right side. Somehow, the American public needs to be educated that there are no “sides” in this debate. There is one hard-line version of the truth: indoor tanning causes cancer.

Assisted by Jessica Began

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On its public website, the Indoor Tanning Association heralds the benefits of indoor tanning. ITA says tanning is natural—“what your body is designed to do.” Moderate exposure to the sun or UV light is “absolutely” good for you and in fact, indoor tanning is actually safer than outdoor tanning. Skin cancer—the elephant in the room—merits no concern, says ITA. There is no association or “connection between melanoma and UV exposure from tanning beds.” The tanning industry markets itself as a healthy and beneficial service. “Tanning is a lifestyle. Tanning is relaxing and makes us look good and feel good. So why not celebrate it?!” asks the 2008/2009 LOOKING FIT ® Tanning Fact Book.^[1]
 

The ITA and other pro-tanning companies cannot get away with such misrepresentative marketing and advertizing. The FDA must crack down on its regulation of the indoor tanning industry, and one important area for regulation is marketing and advertising. No one can or should assume that the American public knows indoor tanning is dangerous. Moreover, no one can or should assume that the American public will brush off assertions that tanning is relaxing and makes us feel good. Words have power. They must be strictly regulated and in the case of indoor tanning, they must be regulated to accurately represent and reflect the risks and consequences associated with indoor tanning.

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Indoor Tanning Tax

In the 2010 health care legislation, a 10% tax on indoor tanning was put into place. The question becomes: Will it work? Some argue that the impact will be minimal: “There is also a 10% tax on indoor tanning services included in the new health care reform bill. A tax won't make a dent in an addict's habit, Rigel says.[1] A 10% tax on a $20 indoor tanning session, for example, is just $2. Still, "it can't hurt, but we have to get people to not think that tanning is wonderful," he says.”[2] As Rigel says, it can’t hurt. It might dissuade some individuals, perhaps teenagers who have limited access to money, from engaging in the practice.

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Over the coming days we will be posting a new series on the indoor tanning world. The series, penned by Jessica Began will cover:

1. Regulation
2. Education
3. Cultural Messaging associated with tanning
4. Lessons from tobacco

Today we will start with our first of two segments on regulation:

Why Are We Wary to Regulate?

Independence, the exercise of free will, and emphasis on the individual are all values that characterize American society. As a result, American government and individuals are wary to interfere in behavior that we view as a personal choice. If does not harm others, then why should we care? Perhaps we care for the health of the individual engaging in the behavior. But if that behavior is a personal choice, then most agree that the responsibility falls on the individual, and not the greater public.

Despite our uneasiness with regulation, American government seems to regulate everything. Regulation of products and services is readily accepted and legitimized, especially when it polices the behavior and choices of minors. We prohibit behavior (marijuana, drugs); regulate behavior by age (alcohol, tobacco products); or financially discourage behavior (taxes).

Regulation of Use of Indoor Tanning

The indoor tanning industry is regulated by the Food and Drug Administration (FDA). However, current regulation is shockingly limited. The only requirement is that UV ray devices carry a warning label with specific information. And even this regulation needs improvement. As the FDA publishes on its website: “FDA is considering amending the warning label requirements to

• strengthen the warnings about skin cancer and irreversible eye damage
• make the warning easier for consumers to read and understand”

In 2009, the Archives of Dermatology published a report on youth access to artificial UV radiation. The report clearly concluded that the indoor tanning industry should be regulated, if not banned: “We recommend that additional states pass youth access legislation, preferably in the form of bans.”[1] In July 2009, the International Agency for Research on Cancer (IARC), an expert committee of the World Health Organization (WHO), classified indoor tanning as “carcinogenic to humans.” Indoor tanning joined the ranks of cigarettes and arsenic.

Recently, in January of this year, U.S. Representatives Carolyn Maloney (D-NY) and Charlie Dent (R-PA) introduced a Congressional bill to help regulate indoor tanning. The “Tanning Bed Cancer Control Act” would expand regulation of indoor tanning by limiting the amount of UV rays that tanning beds emit and limiting the amount of time consumers may be exposed to those rays. Maloney and Dent referred to tanning beds as the “cigarettes of our time.”

A variety of states have also proposed indoor tanning legislation.[2] Some examples of the restrictions these bills would establish are: banning of indoor tanning for patrons under age 14, 16, or 18; tightening of parental consent requirements; and increased regulation of visible warnings. In some cases, indoor tanning is only permitted if accompanied by a letter from a medical doctor. In my opinion, this is an excellent part of the legislation. When “permission” to use indoor tanning devices comes from a parent, it is understood to be a question of leniency or morality. However, when permission must come from a doctor, the issue of indoor tanning is reframed as a human health issue, rather than an individual preference. New Hampshire, Maryland, Ohio, New York, Rhode Island, South Dakota, Vermont, Washington all have proposed legislation that would ban tanning for minors (under 18), with some allowing it only with a doctor’s note. All states should follow suit.

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