1968 - FTC - National Consumer Protection Hearings - Federal Trade Commission

  • (p11) - SBA - Statement of Howard Samuels, Administrator, Small Business Administration
    • The tremendous cost of insurance that is brought about by the facts that our insurance laws are so fragmented in this country.... (p11)
  • (p126-) - Statement of Michael D. Padnos, Director, Atlanta Legal Aid Society
    • (p126) - One of the things we have found is that if we get a seller who is not a good fellow, if we get a seller who is an unscrupulous seller as opposed to the reputable businessman who this Commission so properly protects, an unscrupulous seller is all too delighted to capitulate to the demands that we make in an individual case, because he has hundreds and hundreds of other cases where he can make lots of unscrupulous money.
      • It is for this reason that there often is the demand for some kind of regulation or government action to assist the specific buyer. Individual cases really aren't enough.
      • One of the things I would like to tell you about, however, is one of our individual cases.
    • (p126) - Now, that case was a case in which had we gone to court, we didn't have a leg to stand on, because there was a contract, and a note that had been signed.
      • Everything was against us from a legal point of view.
    • (p127) - They do not want to get into the public glare. It is not the Uniform Credit Code, not the U.C.C., not all the laws of the Commission nor anybody else that hurts these people.
      • It is the mere terror of appearing before a jury of 12 honest men and women and exposing to the light of day the practices that they are engaged in.
    • (p128) - I think it is very complicated, the idea of borrowing money, and I have talked to a lot of finance company people about it,
      • .... and the best idea I can get is that the best way to borrow money is to call several companies and find out, not the interest rates and not the finance charges and not the insurance (which is too complicated for me, and I have an advanced degree) ...
      • ... but I have suggested in our little brochures that the people simply call up and say, "If I want to borrow $300, how much do I have to pay back over a two-year period," period.
      • Maybe that is incredibly naive, but so far I am informed by the staff of the Commissioners on Uniform State Laws that this is a really good way to do things
  • (p139) - CEPA - Crime and Lawlessness in the Market Place. Statement to National Consumer Protection Hearings of Federal Trade Commission, Washington, D.C., Thursday, November 21, 1968, By Max Weiner, Educational Director, Consumers Education And Protective Association
    • Hundreds of millions of dollars have been stolen by fly-by- night insurance companies from policy holders.
    • Uncounted hundreds of millions in unpaid claims, representing tragic and helpless victims of accidents left uncompensated, have resulted from the operations of insurance swindlers.
    • Few, if any, of the insurance swindlers have gone to jail.
      • Instead, with money siphoned off from the companies they fleeced they have entered other lucrative fields and continue to defraud and swindle. 
  • (p215) - Wilbur J. Cohen, Secretary of Health, Education, and Welfare - In my department, and in other departments, a good deal of money is spent by the taxpayer to look into various products and services and devices, and I believe the government should exercise a policy of full revelation of all of these facts to the taxpayers, giving the pros, the cons, the scientific information that has been revealed in the course of these studies.
    • Chairman Dixon: In other words, if the taxpayers have paid for it, if it is good enough for the government, then the public ought to be entitled to it.
    • Secretary Cohen: If the government makes a study to find out what is the best pencil to buy at the best price, at the best quality, and it makes that determination on the basis of some comparative analysis that information ought to be made available to the taxpayer.
      • If it is an automobile tire or a battery, or if it is a life insurance policy or a medical care policy, or if it is a hearing aid, I can conceive of a number of things in my own department that we are concerned with, I see no reason why we should hide that information under a bushel. We ought to give the information to all the 200 million people who ought to know about it.
  • (p221) - Wilbur J. Cohen, Secretary of Health, Education, and Welfare
    • And, finally, and also growing out of my experience in my Department, I believe that continued surveillance and examination of the insurance industry, automobile insurance, medical care insurance and life insurance is necessary, with some comparative pricing of equal products, so that the consumer can have a better way of judging what he is buying at the present time
    • The contracts and the arrangements are so diverse, the scope of benefits is so different.
      • We have now had nearly 35 years of experience in this field, that there ought to be more uniformity, more comprehensive protection, more price comparison, and I would urge that a Department like my own, be authorized to analyze medical care contracts to find out the units, to price them and disseminate that information.
      • The same thing ought to be done in automobile insurance, casualty insurance, and life insurance.
  • (p244) - Consumer Fraud and Consumer Protection in Wisconsin, A Report to the Federal Trade Commission by Bronson C. La Follette, Attorney General Wisconsin, September 1, 1968 - <WishList>
    • The Insurance Department supervises the sale of stock by Wisconsin insurance companies, prevents the imposition of excessive or discriminatory insurance rates and generally polices the industry for improper practices.
  • (p273) - Sherman Lubotsky, University of Wisconsin Extension Services
    • Do you know who are educating the children? It is the people that are creating the problems.
    • The organizations that are providing the educational material to our school system are providing sales literature which help sell their products and their services.
    • I feel this should be labeled as advertisement and we should not allow teachers to distribute sales literature as educational material.
    • ⇒  One university teacher had her husband who is an insurance salesman, to teach life insurance to her class.
      • ⇒ Insurance men and other salesmen are taught to sell the most expensive product so he can get the highest commission.
      • I think this sort of thing should be kept out of our school system.
  • (p278) - Sherman Lubotsky, University of Wisconsin Extension Services
    • Who can we trust? I have a recent article here from the Co-op News which said that a jury in Massachusetts Superior Court in Boston had found three National Consumer Finance companies guilty of bribery and conspiracy. This is public knowledge.
    • Are these the people we can trust to educate our children, to pass legislation?  I hope not.
    • ⇒ Commissioner Jones: I really can't let all of this go on. I just must make a comment here. I get the drift from your testimony that anybody who is in the insurance business is dishonest and basically incapable of educating; if there is one finance company that engages in fraud, that condemns the entire finance industry; and they are educating our children, and I get the impression that you say that the profit is all for the birds
      • It just seems to me that you are in the wrong forum.
      • I don't understand any of these remarks of yours.
      • I am not buying these generalizations and I don't think we should sit up here and listen to them without somebody protesting this kind of conversation.
    • Mr. Lubotsky: That is your opinion. But I am entitled to mine. If that is the case, I won't even continue unless the rest of the Commissioners want me to.
    • Commissioner Jones: I just want to get the record straight.
    • Chairman Dixon: Go ahead and sum up.
    • Mr. Lubotsky: I think we should get to the cause of the problem and not just the symptoms. And the cause of the problem is that this sort of thing is allowed to go on while I am not allowed to say what I want or be critical of it.
    • Chairman Dixon: You are allowed to say what you want.
    • Mr. Lubotsky: I am? I am sorry. I take that back. But I get objections to it.
  • (p350-) - Statement By Laurens Silver, Deputy Director, Neighborhood Legal Services, Washington, D.C.
    • Buyers rarely consent to these clauses.
      • When they read them they rarely understand their legal significance.
      • More importantly, they have no choice about their inclusion.
      • Seller insistence on the inclusion of clauses giving all of the benefits of the contract to sellers while allocating all of the risks to the buyer should be characterized as an unfair trade practice.
    • The Federal Trade Commission has been active in dealing with some aspects of the practices of insurance companies.
      • But there is to my knowledge no FTC case involving the consumer credit insurance and challenging the reasonableness of premiums charged for such insurance.
      • To my knowledge, there is no FTC case challenging the practice of unilaterally including clauses in contracts that require the buyer to pay all premiums on insurance that is of little or no benefit to the buyer.
    • The Consumer Credit Protection Act gives FTC additional authority to investigate the entire area of consumer credit insurance and to devise reasonable guidelines.
      • The Federal Trade Commission may be one of the few agencies with such investigatory powers to seriously study the problem.