566: Jack Gillis Consumer Federation of America, COVID-19 Scams

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It's my pleasure to welcome Jack Gillis. He is executive director of the Consumer Federation of America. You know, when I was a kid growing up in Los Angeles, I used to watch a TV show that I liked very much, and it was called Fight Back with David Horowitz. And that was my first experience with consumer advocacy. And ever since then, I always loved the idea of being a consumer advocate, and I would consider myself one today. So it's great to have Jack on. Back in the early 1980s, he was cited by the New York Times as a leader in the next generation of consumer advocates. He was a former contributing consumer correspondent for the Today show, and it's great to have him here today from Cape Cod, Massachusetts. Jack, welcome. How are you?

Well, good. Thank you very much for that kind introduction. And actually, I was a friend of David Horowitz's many years ago, so that brings back a few memories.

Yeah. Yeah. Is he still around? I mean, I hate to ask a question like that, but, you know, he would have to be pretty up there in yours by now, I guess. Yeah.

He is definitely not practicing advocacy, and I'm not quite sure what his status.

Is, but it was great. I used to love the way Jack, he went in and exposed scams and protected the consumer. And back then, it was a lot of auto repair shops or the plumber that came over or whatever, and he just exposed these scam artists that were ripping people off, and he was doing such a good service to people. And I think in the business world, anybody listening who's in the business world, you know, there's just this kind of tendency to let it go to, oh, I don't want to have the hassle. I remember I was having breakfast with a friend of mine, you know, a few months back, and, you know, he was telling me about someone who Ripped him off. And, and I said, well, did you take him to court? And he said, nah, I don't do stuff like that. I'm like, are you kidding? You know, the next person you know, if you don't take a stand, you're not just doing it for yourself, you're doing it for the next person that comes along that's going to get ripped off. And if these crooks and scam artists are allowed to rip you off, you know who's going to stop them if you don't, you got to hold them accountable. And it's just great that there are consumer advocates out there. So since you've been doing it a long time, Jack, what is the state of consumer advocacy in the world today? Are there many of them around anymore? You know, I would liken consumer advocacy to investigative journalism, and that has gone by the wayside almost completely. It's terrible that journalism has become a joke nowadays. But what about the consumer advocates part in particular? You know, like, how many members do you guys have?

Well, the Consumer Federation of America is an association of organizations and we have over 250 members, state, national and local groups, organizations as large as Consumer Reports to small one and two person admin. Advocacy groups in various parts of the country. So the advocacy committee community from the consumer perspective is strong and well, not to get too political. One of the challenges that we are facing is that the current administration in Washington is rolling back so many rules and regulations, things that the average consumer has grown to depend on. That advocacy has never been more important, however, creating change in Washington. Washington, with the dysfunction in Congress and the administration's effort to protect corporations more than consumers, the American consumer is getting the short end of the stick.

Right? But you know, regulations, you know, I don't really believe in. I mean, that's just a sort of a broad discussion of government versus individuals, right? And you know, government regulations always backfire, it seems like, you know, I just love that there are real consumer advocates like yourself out there, you know, yeah, government has a role, but governments just doesn't matter who the administration is. It's. It's dysfunctional. And sometimes when you regulate something, you just, it just kind of disappears and has all these unequal unintended consequences, right? Where you know, you just, the businesses just won't bother anymore. They'll just say, you know, we're just not going to do it. I don't know, it's.

Well, I think, you know, you, you make a point and there is absolutely no question that government functions as overarching look at them, they could be more efficient. But what's interesting is when you ask individual consumers, well, shall we inspect poultry less? Shall we roll back?

No one says yes, right? Yeah, yeah.

Nobody says yes. Shall we decrease the fuel efficiency requirements on vehicles? And you can go on and on and on. And fundamentally, most of us depend on these regulations because left to their own accord, corporate America will always go the cheapest way possible. And that's not necessarily the best way for the American consumer.

Right, right. But you know, these corporations are pass through entities. I mean, the cheapest way is often the cheapest way for the consumer. So you know, they're just going to ra prices and there's going to be less competition and that's worse for consumers. So, you know, these are broad issues that will never be settled. You know, I get it, I get it. But tell us about some of the hot things you're working on now. Like obviously Covid is in the news and lots of new scam artists out there. Every time there's a crisis, there's a new set of scammers that figure out how to take advantage of people, Right?

That's right. And Covid has been particularly troubling for consumers and it's provided great opportunities for scammers. For example, illicit vaccines, cures, air filters that really don't work, testing kits that don't work. We're all kind of desperate to protect ourselves from this vaccine. So we are pretty vulnerable to. Yeah, thank you.

Maybe we will in the future have to protect yourselves against a vaccine because sometimes the vaccine's worse than the disease. So let's hope not.

Yeah, well, that was an interesting, seems slip of the tongue. But in any event, we are particularly vulnerable. So if you receive a phone call, an email, a text message or a letter with claims to sell you any of these items that propose to cure this problem or propose to filter out the air in your home or propose to provide you with a test kit. They're just not legit. They're a scam. But we can easily fall victims to these because we're scared. We don't know what to do and we need help. Charity related scams are also popping up now due to the coronavirus. So people need to be very cautious about any charity calling and asking for donations, especially if they associate themselves with the coronavirus.

Yeah, there are some good resources out there on charities, by the way. Charity Navigator Navstar I think is another one where you can go and find out how legitimate the charity is. And you know, things like that. So just there are resources to check charities out as well. But that's a good point. You bring up. It's the charity scams, too. And they might be calling, you know, if it's telemarketer, for example, or solicitor of some sort, they might be using the name of a legitimate charity, but maybe the money won't get there. Right. It doesn't. They're just somehow getting in the way of the transaction, setting up a fake bank account to take the money. I mean, there's all kinds of ways that can scam you, Right?

That's right. And another one is Social Security scams. The Social Security scammers may mislead you into believing that you need to provide additional personal information or pay for something by virtue of a gift card, a wire transfer, or Internet currency. Any communication that says the Social Security Administration will suspend or decrease your benefits due to COVID 19 is a scam, whether you receive it by letter, text, email, or phone call. So one needs to be extraordinarily careful, especially as more and more consumers are depending on Social Security for their income.

Yeah, definitely. Definitely. And you, when we talked off air for a moment before we started, you talked about COVID related financial scams. Is that what we're covering now, or are there some other scams you want people to know about related to that?

Well, yes, and I think here's what's happening. The COVID situation has put most American families under severe financial pressures, and they are making changes to their life. They're contacting their mortgage companies, for example, and saying, can I have some reprieve for a few months on my mortgage payments? I have a reprieve on my rental.

Payments if I'm renting, a forbearance on payment.

And these forbearance programs, we are asking Congress to be sure that it does not impact my credit score or my credit rating. Because your credit rating today has become so important for everything you do, whether it's your utility company, your insurance costs for your car, whether or not you get additional loans to carry you through this particular situation and how much you pay for those loans. So that's a problem for many, many consumers. And our recommendation is if you find yourself in financial difficulty, be proactive, contact your debtors and ask for some form of forbearance. More and more debtors are realizing that they would rather keep you on through this crisis than bust you out and try to, you know, take back your mortgage or take back your car or whatever the situation.

Yeah, yeah, the lenders will work with you. The only thing is, and we have a lot of investors listening, just remember, if you're in a forbearance program, if you enter one of those, you're probably not going to be able to qualify for any new loans to purchase properties at the time you're doing that. But if you do it, there should be no negative credit reporting. And by the way, that is a conflict of interest, because if you think about it, if they can't notify other potential lenders that you've taken forbearance and then you go out and apply for new financing for something else, a property, a car, whatever, it's kind of not fair to that lender either, because the system is supposed to protect them as well as the consumer. We're talking about the consumer. But there is another side to that coin, right?

That's right. But hopefully.

When you go out to get additional loans, for example, if you're under forbearance, you will still be noted that you have that particular loan. Now, it's unlikely that you'll qualify for a new loan, regardless of whether or not you're in forbearance or not. But if you do qualify, then go for it. But in the meantime, because you are in forbearance, it's probably because you're having trouble paying that amount as it is. So it's unlikely that you'll get that second loan.

And so we're talking from the perspective of consumers that really are in financial hardship right now. And this whole situation has been very uneven. Some people are doing just fine, some people are doing better, and a lot are doing a lot worse. So it's a very uneven thing. Many times in recessionary times, it's more even, evenly distributed than this. But this time it is extremely lumpy, to say the least, in the sort of the distribution of hardship. I wanted to ask you, and I don't expect you, by the way, if I'm putting you on the spot to know about every case on your website because you're a big organization and you've got a lot going on. But this one really caught my eye. It's a post in your Fact sheet section about investment professionals. And I like to always call Wall street the modern version of organized crime.

And this one's entitled the SEC securities and Exchange Commission, the SEC's best interest.

Bait and Switch. And it's talking about how in reality, this program, it says instead of strengthening protections for investors, it is a craven giveaway to Wall Street. Instead of strengthening their protections or the investor protections it will preserve and protect broker dealers ability to rip off their clients, water down the standard that applies to investment advisors and abandon investors to sort out the differences between brokers and advisors based on confusing and misleading disclosures. I don't know if you're following this one personally but but any thoughts about it? If you are?

Sure. Well here's the bottom line. We called for investor advisors, financial advisors to operate as fiduciaries, I.e. operate in the best interest of their clients. That was going to be the law for retirement accounts under Obama's Department of Labor. That was overturned by the courts and now it is a free for all and there is no fundamental responsibility for investment advisors or financial advisors to operate as true fiduciaries. So what does that mean? That means they can sell you products that are in their best interest rather than in your best interest. And that's what our efforts are in terms of investor protection. And right now the sec, as we've indicated in that post, is purporting to protect investors but really giving the industry something to hide behind rather than be robust sellers of products that are in the best interest of investors. Now this is particularly problematic for small investors, big investors, they're on their own. They're big people, they're big companies, they're big corporations. They have the ability to research particular tools or research particular investments and make a determination if it's good or bad for them. But for the average investor we can't do that. So we have to depend on whoever it is that's selling this product to us to give us the straight story on the product. And unfortunately the government is really backing off on those types of requirements. It's a free for all out there Jack.

Back to our prior conversation, which by the way I don't expect us to solve. It's the debate of the ages. This will rage for thousands of years, but well, I mean there is so little competition on Wall street. It is absolutely appalling. These duopolies that exist that will never have any competition. I mean who starts up an investment bank anymore? Who's ever going to compete with Goldman Sachs or as I like to say, Goldman Sachs? There's just no competition. And these companies secretly love regulation because it builds a fence, a moat around their business that makes it imposs for new entrants to come in and play in their pond. So it's a touchy issue. I don't know like Zuckerberg and we're going to talk about tech in a minute, which is a fascinating. These tech tyrants we have. He's begging to be regulated because he knows there's not going to be another startup that will be able to compete with him ever. Right. The regulation will establish their dominance. And that's a tough one. Isn't that a tough one to really. I don't know. I don't have a solution. I'm just pointing out the problem.

Well, yes, and you're really, you're really backing up into the old issue, too big to fail. And that's what's happening with many of these entities. They've become so big that the government actually has to step in and protect them or help them if they get into trouble themselves. Because the failure of these big institutions will trickle down and have. Have tremendous economic harm on the average investor or the average consumer.

And sadly, what that means to us is that they get to.

And they're too big.

They get to operate in an intentionally irresponsible manner because they know that they can just skim all the profits off the top and take the goodies and not save for that rainy day that they know will come. I mean, these are economics experts, for God's sake. Right? They certainly know that there are cycles and then they'll just get a bailout. I mean, look at American Airlines. They made a fortune. I mean, didn't they save any money? It's like, these are giant companies. Then, you know, in the first month of COVID they're like, oh, we need a bailout because we spent all our money buying our stock back to enrich our executives over the last 10 years. It's pathetic. I mean, these people should go to jail. It's unbelievable.

Well, that is, that's an excellent example of a serious problem. And one that's even more serious that's contemporary right now is the auto insurance industry. We're not driving much, and because we're not driving much, we're not in many accidents. The accident rates have gone down exponentially in the last four or five months. And yet the rebates that the insurance companies have provided consumers don't even come close to the billions in windfalls that they have received because they're not paying out accidents, damage claims, and that's a serious problem. And it's probably because the insurance industry is regulated on a state by state basis, and state insurance regulators are either in the pockets of the industry or asleep at the wheel.

It's unbelievable. It really is. It really is. You know, you have another thing on here, and we should touch on the big tech companies, but, but media Concentration. And this is just, you know, all of our media is so corporatized and sterilized and it's like the news is not even the news anymore over the last 20 years. It's just awful how we have this concentration of media. Can you tell us about that a little bit? And it's a whole section on your website, by the way.

Yeah. And I think there are two components of this problem. One is advertiser control of the media outlets because they are so desperate for funding that the Chinese wall that was traditionally between the media and their advertisers is slowly breaking down. The second but probably more significant issue is the tremendous amount of non edited information that is presented to consumers as news. It's very difficult for most of us who spend a lot of time on Facebook or Instagram or the Internet to determine whether or not a particular story has been vetted, is legitimate and is truthful. And it's very easy to package misinformation in a format that looks so legitimate. And that has become a very serious problem. And it goes back to this Covid situation where you have all of these so called reports on Covid cures, things you can do to protect yourself, which are really just sophisticated advertorials or selling points packaged like media stories.

Yeah, that's true. But how can you ever trust the gatekeeper and the media outlet that vets things? It almost seems better that the source just go direct to the consumer and tweet out their position on something and let the consumer decide. Because at least there's no gatekeeper. Well, there is Jack Dorsey, who is the new censor and you know, that's part of the tech tyranny problem, of course. But I don't know, we find ourselves in like really difficult dilemmas, I think, don't we?

Well, we do. And I think that your president, our president is a perfect example of tweeting out information that is not correct and that yet a lot of people believe. Well, gee, this is from the President, United States. It's got to be right, doesn't it? Can't we trust the president? If we can't trust the president, who can we trust?

But they think the same thing about cnn. They think that's correct. Right. So, you know, it's like if we know that everybody has an agenda, at least, you know, the president has his agenda and his opponents have their agenda. Okay, great. Well, they can both tweet and we'll decide. You know what I mean? Like, I don't know, I'm not saying it's perfect. But, you know, are you going to trust the folks at CNN who've been caught in so many lies or Fox or anybody? They're all just. It's just a big bunch of agenda driven, you know, it's not even news anymore.

Well, that's a sort of a libertarian look, but we at the, the Consumer Federation of America still have, still have faith in your primary news sources. Rightly or wrongly, there is a vetting process and there is an intention to provide the facts. Now, if mistakes are made, that, that happens. But that's the intention. At least it's not an intention to mislead.

Yeah, well, I don't know. You know, the New York Times and all their foibles lately are just. It's just very discouraging. But. So the federation is concerned about media concentration.

So is there a solution being floated on that as to how you think it should be?

Well, our concern right now is really focusing on big tech and big tech is a part of that media concentration. So we are looking at ways in which big tech, Facebook, Twitter, Google, Apple, Microsoft can be regulated. And that's a huge challenge. Many in the advocacy community are actually calling for these companies to be broken up. We have not yet taken a position on that. And as you and I talked earlier prior to the broadcast, we are concerned about trying to regulate five different entities that Facebook would be broken up into versus trying to develop a set of rules and regulations that govern just the one entity. But that is the challenge and the answers are yet to be seen. But we believe that Amazon and some of these other companies at this point are too big and too powerful and something needs to be done.

And they are so abusive. Amazon is abusive to the sellers. They are abusive to their employees. It is absolutely ridiculous. These companies are just too big. There's not enough choice in the marketplace and they've done great things. No one would deny that we all love all of these technologies and conveniences. But I've proposed three things, and I've been saying this for years. Jack, you might be interested. The big tech needs to be either regulated and they need to be regulated under common carrier law, like the phone companies. Meaning that if the phone company doesn't like what we talk about on the phone, they don't get to cancel your phone. Okay? Just because they don't like what you say, if you say you hate the phone company, they don't get to tear your phone out as long as you're paying the bill. Or it's a regulation in many senses. Or they need to be broken up under antitrust and or they need to make their algorithms public. We need to know as consumers why we see certain things in our news feed or our search results and why we don't. And not that you or I will know how to figure all that stuff out, but some group of geniuses will. If all of that was open and that code was open so we could see, why does Google show me this instead of that, then there would be people talking about that. But how do they get to operate in such secrecy? It's absolutely ridiculous that these are the biggest companies on the planet with bigger revenues than the GDPs of many countries. It's absolutely ridiculous that they can have that much power and then all the lobbyists they hire.

That's beyond the, beyond the influence they exert over government. I mean, it's just. It's just crazy.

And those are the challenges. And those are the challenges facing the Consumer Federation of America.

Yeah. Good. Well give out your website.

We are at www.consumerfed.org. that's consumerfed.org and Jack, wrap it up.

With any closing thoughts.

Well, I think the bottom line is it's really buyer beware these days. The government is becoming less and less efficient at protecting us. And the administration is rolling back more and more environmental, safety and public health regulations. So you're on your own, folks. Be careful.

Jack Gillis, thanks for joining us.

My pleasure.

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