Some badly needed consumer protection rules are not going into effect on schedule. They have been challenged either by the courts or by Congress, on such grounds as vagueness, interfering with state's rights or putting too great a burden on industry.
As a result, the Federal Trade Commission will have to spend at least another year trying to save the essence of certain key rules. Congress has shot down other FTC consumer-protection investigations entirely.
Among the proposed rules now at risk: The funeral rule, requiring funeral parlors to itemize prices and stop making misleading statements in order to sell their services. An undertaker might, for example, say that state law requires all bodies to be embalmed (usually not the case) and imply, falsely, that state law requires you to buy a coffin even if the body is being cremated. t
The House of Representatives first tried to kill this rule entirely, on the grounds that it placed an unfair burden on the funeral business. As a compromise, the rule has been sent back to the FTC for reworking -- although the House may try to veto it again next year.
In a recent, broad-based attack on the FTC's consumer protection activities, Congress reserved the right to kill any rule the FTC makes without having to send its action to the White House for approval. The rewritten funeral rule might be the first test of this veto power.
The vocational school rule, aimed atsleazy operators who sign up students ill-fitted for the course and not likely to finish school. The salesman gets his commission even if the student drops out and the student gets a meager refund or none at all. Even if the student graduates, he or she may find that the graduation certificate does not provide the expected job qualifications.
Vocational schools challenged this rule in court and won a victory on two points. The FTC may not, as proposed, force them to state what percentage of their graduates actually found jobs (because the school may not know). Also, as the rule is now written, the FTC may not force vocational schools to give dropouts a pro rate refund, covering whatever portion of the course the student failed to finish.
The FTC also won two points: Vocational schools may be forced to disclose their graduation and dropout rates, and a new student may quit and get a refund within 14 days of signing up.
Some FTC staff attorneys think that pro rate refunds may be acceptable if the rule also lists the deceptive practices that refunds are meant to deter. But the language of the court is ambiguous on this point. The commission is now deciding to what extent it can, or should, rework the rule.
The eyeglass rule. The court upheld that part of the rule that forces eye doctors to give you your eyeglass prescription so that you can price-shop for glasses. But it suspended the FTC's ban on antiadvertising laws and on state laws that heap burdens and limitations on price advertising.
(Antiadvertising laws reduce price competition, hence keep prices up. A recent FTC study found that the price of eyeglasses and an eye exam are $22 cheaper where state laws allow them to work for commercial firms such as Sear Roebuck.)
Basically, the court said that states are already in the process of removing their price-advertising bans, so the FTC should reconsider whether the rule is actually needed. But some states still have no-advertising laws on the books, and others discourage it in subtle ways. The FTC is now regathering information on state practices; for the time being, however, it may have to pursue problem states one at a time rather than write a general rule.
The insualtion rule, intended to give consumers a standard for comparing the effectiveness of one type of home insulation with another. The industry questioned the fairness of an FTC-mandated test for R-value (which measures resistance to heat); the court sent the FTC back to the drawing board to reconsider its testing standards.
The court also bought the industry's argument that the FTC was too harsh in mandating a seven-second, message for TV ads. The message, roughly: "The higher the R-value, the greater the insulating power. Ask your seller for a fact-sheet on R-value."
Recent action in Congress also stopped or limited probes that the FTC was making in other areas, such as studies of price disclosure in the life-insurance industry. Ti remains to be seen whether these are only temporary setbacks for the FTC or whether its consumer protection activities have been permanently weakened.