Cities Expand Consumer Protections Amid the COVID-19 Pandemic

Four local­i­ties — Detroit; Philadel­phia; St. Paul, Min­neso­ta; and Mem­phis’ Shel­by Coun­ty, Ten­nessee — have announced cam­paigns to expand con­sumer pro­tec­tions, includ­ing efforts to rein in scams relat­ed to the COVID-19 pandemic.

Under the Local Con­sumer Finan­cial Pro­tec­tion Ini­tia­tive, fund­ed by the Annie E. Casey Foun­da­tion, lead­ers in these local­i­ties will begin build­ing stronger laws and enforce­ment strate­gies to pro­tect res­i­dents from fraud, preda­to­ry lend­ing and oth­er finan­cial and con­sumer schemes. Each local gov­ern­ment will receive a $10,000 grant and nine months of tech­ni­cal assis­tance to aid in this work.

As part of the ini­tia­tive, each local­i­ty will:

• iden­ti­fy the most sig­nif­i­cant scams and unfair prac­tices fac­ing residents;
• sur­vey the legal land­scape around con­sumer pro­tec­tions at the state and local levels;
• con­vene key par­ties, includ­ing con­sumer advo­cates and busi­ness lead­ers; and
• cre­ate or expand ways to enforce local con­sumer finan­cial pro­tec­tion laws and edu­cate the public.

“We know that strong con­sumer pro­tec­tions play a key role in help­ing young peo­ple and their fam­i­lies remain sta­ble by reduc­ing or pre­vent­ing crip­pling debt,” says Don Bay­lor Jr., a senior asso­ciate with the Casey Foundation.

Res­i­dents of col­or are par­tic­u­lar­ly vul­ner­a­ble, says Bay­lor. Too often, young peo­ple of col­or and their fam­i­lies are tar­gets of fraud, finan­cial scams and preda­to­ry lend­ing. Such unfair prac­tices — which can under­cut finan­cial sta­bil­i­ty and wealth-build­ing oppor­tu­ni­ties — often per­sist due to inef­fec­tive laws or the insuf­fi­cient enforce­ment of legal protections.

Lead­ing this work is the Cities for Finan­cial Empow­er­ment (CFE) Fund. Launched in 2017, the CFE Fund ini­tial­ly helped lead­ers expand and improve con­sumer pro­tec­tions in four loca­tions: Albu­querque, New Mex­i­co; Den­ver; Nashville, Ten­nessee; and Salt Lake City. Today, each city has tak­en steps to pro­tect res­i­dents, includ­ing beef­ing up enforce­ment strate­gies and build­ing a con­sumer com­plaint infrastructure.

“This ini­tia­tive is already doing great work estab­lish­ing infra­struc­ture in local gov­ern­ments to pro­tect peo­ple from fraud­u­lent schemes and unfair lend­ing prac­tices,” explains Bay­lor. ​“We’re glad to see more com­mu­ni­ties step­ping up to defend their res­i­dents from threats to their finan­cial well-being. We hope more local gov­ern­ments take notice of this work.”

A focus on COVID-19 scams

First up for the new local­i­ties: Stop­ping scams relat­ed to the COVID-19 out­break — includ­ing clamp­ing down on the sale of fake virus-mit­i­ga­tion prod­ucts and unful­filled promis­es to secure gov­ern­ment ben­e­fits. The CFE Fund will pro­vide tech­ni­cal assis­tance and help local lead­ers learn how to solic­it tips and com­plaints, edu­cate con­sumers and poten­tial­ly pros­e­cute peo­ple respon­si­ble for these schemes.

“City lead­ers across the coun­try are report­ing scams, decep­tive adver­tis­ing and price goug­ing as preda­to­ry actors take advan­tage of vul­ner­a­ble peo­ple dur­ing the COVID-19 out­break,” says Jonathan Mintz, found­ing pres­i­dent and CEO of the CFE Fund. ​“For­tu­nate­ly, local gov­ern­ments are play­ing an increas­ing­ly mean­ing­ful role in finan­cial­ly empow­er­ing their res­i­dents and pro­tect­ing their hard-earned assets through robust local con­sumer finan­cial pro­tec­tion efforts.”

Learn more about debt reduc­tion in the South