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Progress on toy safety, but hazards remain — and there’s an app for that

There’s been much progress in toy safety over the past quarter century, but there are still toys with harmful chemicals and choking hazards available on store shelves, according to the 25th annual Trouble in Toyland report from Illinois PIRG.

The group has updated a smartphone application to help parents check on toy safety while they’re shopping, and launched a campaign calling on the Consumer Product Safety Commission to update its small parts choking hazard standard.

A wood train toy cited in the report contains parts just large enough to pass the current standard – but still small enough to block a child’s airway.  PIRG was alerted to this particular toy by a mother who had to perform the Heimlich maneuver on her one-year-old when he swallowed a peg, said Brian Imus.

Other toys cited in the report contain harmful and in some cases unlawful levels of phthatelates, lead, and antimony.

Parents can check the safety of toys on the phone while they’re shopping using an interactive website available at www.toysafety.mobi (first offered last year).  A web widget for the app is now available and being promoted to moms’ blogs and similar sites.

The smartphone app now includes a list of recalled products, as well as short video clips with tips such as how to check whether a toy’s parts are too small for a child.  It also allows parents to report toy hazards – and to sign a petition to the CSPS calling for a stronger small parts standard.

Much of the reported progress follows the passage of the Consumer Product Safety Improvement Act in 2008 (sponsored by Rep. Jan Schakowsky and Sen. Richard Durbin and pushed by Chicago parent activists), Imus said.

He anticipates efforts in the newly-elected Congress to roll back some standards and cut funding for the CSPC.  “Our message is, it’s working,” he said.  “The vast majority of toys are safe.”

That’s a stark difference from previous years, when millions of toys were recalled due to lead levels and other hazards.

Much more needs to be done to regulate toxic chemicals, tens of thousands of which are produced with little oversight, Imus said.  A bill by Rep. Bobby Rush to require safety testing by the chemical industry was defeated this year in “a testament to the combined clout of $674 billion chemical industry, the companies that process their compounds into air fresheners, detergents, perfumes, cosmetics, toys, medical devices and other consumer goods, and the stores that sell them,” according to Politics Daily.

Rush and other sponsors promised to reintroduce the bill in the next session – but prospects for passage now are probably even worse.

Chicago toddler inspires new safety law

The chair of the Consumer Product Safety Commission visits Chicago tomorrow to discuss new safety measures under the Danny Keysar Safety Notification Act, named for a Chicago toddler, which went into effect June 28.

Joining CPSC chair Inez Tenenbaum will be Linda Ginzel and Boaz Keysar, Danny’s parents.  They founded the nonprofit advocacy group Kids In Danger twelve years ago, after 16-month-old Danny died when a crib collapsed at a childcare center – and they learned that the crib had been recalled five years earlier.

(As noted here in 2007, the feeble efforts of the underfunded, industry-oriented commission to publicize the crib’s defects were characterized as a “silent recall” at the time.)

The new law is designed to increased product recall effectiveness, and makes product registration cards mandatory for an array of children’s products, according to the Philadelphia Inquirer.

Tenenbaum, Ginzel and Keysar will be joined by Illinois Attorney General Lisa Madigan and Rachel Weintraub of the Consumer Federation of America at 2 p.m., Thursday, July 22, at the University of Chicago Gleacher Center, 450 N. Cityfront Plaza.

Chicago homeowners lose $15 billion

Foreclosures continue at a record pace – one every 22 minutes in Chicago — and the average Chicago homeowner has lost $27,000 in their home’s value over the past five years, according to a new report.

That adds up to about $15 billion in lost wealth for Chicago residents, according to a new report from National People’s Action (pdf).

Minority and low-income neighborhoods that were the target of predatory lending continue to bear the brunt of the crisis, but “the devastation is spreading,” according to the report.  High unemployment and drastic cuts to city and state budgets following the financial collapse caused by subprime crisis has led to foreclosure spikes in nearly every neighborhood.

The largest increase in foreclosures last year was in Lincoln Park, where the rate more than doubled, according to the report.

And a year and a half after “reckless and predatory lending took down the economy,” financial reform is still pending in Washington.  That means the subprime loans that caused the crisis – option ARMs, interest-only, and no-doc loans — are still legal, NPA notes.

Legislation creating a consumer financial protection agency that would regulate mortgage loans and other consumer financial products faces stiff opposition from the banking iindustry.

“Predatory and subprime lending created an unprecedented foreclosure crisis that sent our economy into a tailspin, resulting in millions of people losing their jobs, and spurring even more foreclosures,” said George Goehl of NPA in a release.

“To keep this from happening again, we need a strong, independent consumer protection agency that will protect all of us from predatory and unsafe financial products.”

Tax refund loans targetted

With tax season underway, there’s lots going on with tax refund anticipation loans (RALs), including stepped up regulation and expanded support for free volunteer tax assistance programs which offer alternatives.

Consumer advocates continue to press for the elimination of refund loans, calling them a predatory financial product.  “They’re a high-cost credit product, they’re not necessary, and they primarily target low-wealth people and communities of color,” said Katie Buitrago of the Woodstock Institute.

RALs are “wealth-draining products,” she said.

A Woodstock report issued in January found that Illinois taxpayers who pay “hundreds of dollars to receive their own money a few days earlier” spent $114 million on RALs in 2006, Buitrago said.

Filers in African-American communities are more than three times more likely to use RALs than others, according to the study.  That’s in line with extensive evidence that “high-cost lenders tend to concentrate in communities of color,” Buitrago said.

Early last month, Woodstock joined with consumer advocacy groups across the country to call on the U.S. Office of the Comptroller of the Currency to enforce guidelines issued in 2007 holding banks that issue RALs responsible for the training and advertising of tax preparers who supply them with customers.

Concerns included misleading and deceptive marketing and a high volume of inaccurate returns.

On February 18, OCC announced a new policy statement (pdf) and a consumer advisory on tax refund products.  The policy statement requires banks to ensure that tax preparers provide customers with statements itemizing RAL fees and explaining that RALs are loans which must be repaid even if returns are smaller than anticipated; that RALs can “substantially reduce [earned income tax credit] benefits”; and that alternatives to RALs, including electronic filing and direct deposit, are available.

The policy also bans marketing using terms like “rapid refund” that obscure the fact that RALs are loans.

Woodstock welcomed the policy statement and called for aggressive enforcement of its provisions.  The group reiterated its call for a cap on RAL interest rates, and urged the OCC to prevent other banks from entering the field — and to “convene a meeting of RAL lenders, regulators, and advocates to discuss an orderly exit of banks from this market following the 2010 tax season,” according to a statement provided by Buitrago.

Two national banks currently provide RALs:  HSBC, which finances loans through H&R Block, and JPMorgan Chase, which offers loans through 13,000 independent tax preparers.  A California bank which financed most of Jackson Hewitt’s RALs was barred from the business by OCC last year.

Buitrago said meetings last year with JPMorgan revealed that the bank was not abiding by the 2007 guidelines.

Last November the Illinois Department of Financial and Professional Regulation barred consumer installment lenders from offering RALs and required currency exchanges, payday lenders and pawnshops to apply to IDFPR for licenses to handle RALs.  Spokesperson Sue Hofer said there have been inquiries from businesses about the new requirements, but she had no information about requests for licenses.

Announcing the crackdown, Governor Quinn said the goal was “to limit access to these predatory loans.”

Woodstock has recommended that “fringe preparers” be barred from issuing RALs, noting that they offer the highest-cost loans, often featuring extensive add-on fees for administrative tasks.

In another regulatory development, the IRS recently announced that starting next year, it will begin requiring paid tax preparers to register, fulfill training and competency testing requirements, and abide by a code of ethics.  The agency will also establish a national data base to track tax preparers.

Unlike paid preparers, volunteers at free community-based tax assistance centers undergo annual training and certification exams, said Jackie Lynn Coleman of the National Community Tax Coalition.  In Illinois, free volunteer assistance for low-income families is available from the Center for Economic Progress throughout Chicago and in 30 communities statewide.

In many cases there are bank and credit union partners onsite who will help set up low- and no-cost savings and checking accounts to facilitate direct transfer of returns, said Raisa Allaire of CEP.

With a focus on maximizing use of the earned income tax credit, CEP helped 33,000 Illinois families obtain $52 million in refunds last year.

Some observers anticipate an increase in RAL use by economically-strapped taxpayers.  Coleman said economic pressures can cut both ways.   She said she was hearing about volunteer assistance sites “bursting at the seams.”

“People are refusing to use paid preparers because they really need the additional dollars,” she said.  “They’re willing to wait, even willing to come back” if a volunteer site is full.

Since last year, a new federal grant program has assisted volunteer tax assistance programs with outreach to neglected communities.  CEP has used the funds to reach out to rural and disabled populations, she said.

Still, free volunteer tax preparation sites serve a small fraction of taxpayers.  In Chicago in 2006, about 60 percent of taxpayers used paid preparers, according to IRS figures provided by CEP; for recipients of the earned income tax credit, whose returns can be even more complicated, the figure was almost 73 percent.  Not quite 3 percent of EITC recipients used volunteer preparers.

CEP has increased its volunteer base; it’s up to 2,100 statewide, up 200 from last year, Coleman said.  “That’s not the case everywhere,” she said.  NCTC has launched a national volunteer engagement drive.

One reason low-income taxpayers, including EITC recipients, are more likely to use RALs is because they can be used to cover upfront fees from paid preparers.

When it comes to the EITC, that undercuts the economic stimulus provided by what advocates call the most effective anti-poverty program going.  Congress recognized this last year by increasing payments to larger families and expanding eligibility standards for single taxpayers as part of the recovery act.

Each year RALs take nearly $800 million nationally that could help low-income families — and be spent in local economies – and sends it back to Wall Street.  But with growing awareness, stiffer regulation and greater access to alternatives, the future of this product may be limited.

Indeed, according to one report, tighter bank credit means RALs are taking longer to process – sometimes up to three weeks – “eliminat[ing] the incentive to take them out in the first place.”

Small business backs consumer protection

Big banks are furiously fighting financial reform in Congress – but small businesses are still paying for a decade of Wall Street recklessness with lost business and  frozen credit.

That’s the finding of a report from the Illinois Main Street Alliance – based on a survey of 1,200 small business owners – that’s being released tomorrow outside the Dollar Store Plus in Aurora (Friday, February 5, 12:15 p.m., 1266 N. Lake).

Small business owners from the Alliance will speak in support of a proposed consumer financial protection agency.  Legislation establishing such an agency passed the House of Representatives in December; the Obama administration backs the measure, but currently Senate Banking Committee Chair Chris Dodd is waffling on the issue.

Against usury

With the House of Representatives voting on a financial reform bill including a consumer protection agency (with Rep. Melissa Bean working to weaken its impact), George Goehle of National Peoples Action writes at Huffington Post about the Central Illinois Organizing Project shutting down the Bloomington office of payday lender Advance America.

CIOP wants the lender to limit its interest rates – which can go as high as 400 percent – to 10 percent.

That’s also the goal of the “ten percent campaign” launched last summer by United Power for Action and Justice and discussed by financial muckraker William Greider at the Nation yesterday.

“Ten percent” refers to the tithing requirement of many churches – the slogan is, “If it’s good enough for God…”  It also approximates the ceiling on interest rates which was in effect under longstanding usury laws that were repealed in 1980.

“Usury” can be defined as using economic advantage to dictate loan terms that are guaranteed to drive people to ruin.

[New Deal 2.0 reports that Goehl, along with Heather Booth of Americans for Financial Reform, will be on Bill Moyers’ Journal tonight.  It’s on WTTW at 12:30 a.m. – apparently pushed back by a two-hour broadcast of “Stay Rich Forever and Ever!”]

‘No’ to Comcast-NBC deal

Consumer and media reform advocates are calling on federal regulators to reject a merger between Comcast and NBC, saying it would “seriously harm the public interest.”

“The correct response to this merger is to just say no,” said Corie Wright of the Free Press in a release.

“The pundits who are predicting this merger will be a cakewalk haven’t done a careful analysis,” said Mark Cooper of Consumer Federation of America. “This merger’s potential to foreclose competition and stifle innovation is significant and real.”

The two groups released a report (pdf) detailing how the merger would stifle traditional and online video markets, leading to higher prices for consumers.

The merger would also encourage further media consolidation, as “remaining players in both the distribution and content markets seek to muscle-up to match this new behemoth,” according to the report. That would mean less consumer choice and higher prices.

Shriver Center gets award

The Sargent Shriver National Center on Poverty Law and its president, John Bouman, received the FDIC Chairman’s Award for Innovation in Financial Education today.

They were among six organizations honored by FDIC Chairman Sheila Bair in a ceremony at the National Press Club in Washington, D.C.

Bair commended Bouman and the Shriver Center “for their dedication to empowering consumers to make informed financial decisions by providing financial education in their own unique or innovative way,” according to a release from the FDIC.

In addition to development a financial education curriculum for low-income adults, the Shriver Center’s Community Investment Unit has operated a matched savings and financial literacy program at Mayo Elementary School, 249 E. 37th Street, and helped establish a student-run bank at Curie Metro High Schoool, 4959 S. Archer.

The Chairman’s Award was established as part of FDIC’s 75th anniversary observance.



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