Consumer Protection

Report | Georgia PIRG Education Fund | Consumer Protection

Tax-Increment Financing

Local and state governments use various tools to encourage  development in economically challenged areas. Tax-increment financing (TIF) has been a leading tool used for this purpose. TIF allows cities and towns to borrow against an area’s future tax revenues in order to invest in immediate projects or encourage present development. When used properly, TIF can promote enduring growth and stronger communities.  When used improperly, however, TIF can waste taxpayer resources or channel money to politically favored special interests.

To protect the public interest, governments should impose strong safeguards that ensure that TIF projects are implemented through a transparent, accountable process with clear and compelling goals.

Governments must use care in choosing when to use tax-increment financing. The public can benefit from subsidies that bring lasting economic development to declining or stagnant areas. However, tax-increment financing can be wasted on projects that:

  • Fail to achieve public goals.  By definition, TIF diverts money from schools, parks, and other important services. TIF projects certainly won’t be justifiable, however, if they are used to support projects that fail to bring the hoped-for investment or harm the community in other ways.
  • Enrich special interests at the public’s expense. Poorly designed TIF programs can give government officials a tool to lavish subsidies on favored or well-connected developers – regardless of the project’s public benefits.

·       Encourage development in areas where it is least needed. TIF is intended to spur redevelopment of areas in difficult economic straits; but the tool has also been used to fuel development of previously undeveloped areas. Fort Worth, Texas, for example, used TIF financing to lure the big box sporting goods chain Cabela’s to a tract of prime, newly developed land that was declared “blighted” due to the presence of a stream and lake on the property.

The process of awarding tax-increment financing often takes place without sufficient public awareness and input – creating the opportunity for favoritism and corruption. 

·       TIF often lacks transparency:  The public often lacks the tools to evaluate whether a particular TIF project makes sense. In some states, TIF budgets are not published for public review.  In addition, not all states require the completion and publication of growth forecasts that would enable the public to evaluate the costs and benefits of TIF subsidies.

·       TIF often lacks accountability:  TIF is undertaken in the hope of generating specific benefits—increased employment, land value, and tax revenue among them.  Many TIF laws do not, however, require follow up reporting that would enable the public to determine if the goals of the project were realized.

·       TIF can create “slush funds” that lack public oversight and accountability: In some jurisdictions, TIF revenue can be spent at the discretion of mayors or other public officials. Chicago’s TIF funds have traditionally been disbursed through a separate budget overseen by the mayor, and not even shared in full with the city council. Funds may be allocated to political allies or pet projects – or may continue to be used for projects inside a TIF district long after the project originally intended to receive the TIF funds was completed.

To prevent these problems, states and municipalities should adopt strong rules governing the use of TIF districts and similar development subsidies.   In short, rules should ensure that TIFs are targeted, transparent, accountable, and democratically governed.

·        TIF districts must be targeted and temporary.  TIFs should only be used in service of a specific development strategy, and only in cases where evidence shows that they are likely to succeed. TIFs should not become an all-purpose tool for woo developers. They should only be targeted toward areas in special need of development, for projects that are unlikely to occur without public intervention, and with a defined time limit at which point the property’s tax revenue will once again be used for general public purposes.

·       Subsidy recipients must be held accountable for meeting goals.  TIF agreements should include measurable targets for success, and regular performance reviews should measure progress towards those benchmarks. Where possible, municipalities should retain the ability to demand return of some or all of the money used to subsidize private investors in the event that development promises are not fulfilled.

·       Information on TIF must be transparent.  Because TIF has long-term implications for a jurisdiction’s finances and ability to provide public services, the decision to create a TIF district should come with the highest level of transparency and public participation. In addition, jurisdictions should supply detailed, ongoing information about the finances and performance of TIF projects via the Internet, following “Transparency 2.0” standards of budget and spending disclosure. (See page xx.)

·       Citizens must have the tools to evaluate the benefits and trade-offs of TIF. Governments should account for the costs of TIF districts as part of a jurisdiction’s overall budget – enabling the public and decision-makers to evaluate the trade-offs involved in tax-increment financing and the impacts on other public services.

Report | Georgia PIRG Education Fund | Consumer Protection

Ten Reasons Why We Need the Consumer Financial Protection Bureau Now

For years leading up to the 2008 financial collapse, federal bank regulators ignored numerous warnings of increasingly predatory mortgage practices, credit card tricks and unfair overdraft policies used by banks. The banks were earning billions from “gotcha” practices. Incredibly, bank regulators actively encouraged this behavior, arguing it was profitable and kept banks safe. No regulator cared about its other (and, to them, secondary) job: enforcing consumer laws. Some regulators rejected the role and even actively worked to prevent states from carrying it out. Worse, firms were able to pick and choose among regulators, encouraging a “race-to-the-regulatory-bottom.” That is the system that failed to protect us. 

This report outlines predatory financial practices that hurt consumers and helped collapse the economy, costing us eight million jobs, millions of foreclosed homes and trillions of dollars in lost home and retirement values. It explains these and other emerging problems as “10 Reasons We Need The Consumer Financial Protection Bureau Now.”

In response to the problems caused by those predatory practices, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 included a major reform demanded by the public: it established the landmark Consumer Financial Protection Bureau.

On July 21, 2011, the law provides that the CFPB takes over as the primary regulator of 18 consumer financial laws that 7 federal regulators had unevenly and inadequately implemented and enforced in both the bank and non-bank financial sectors.

Making Markets Work: According to the CFPB itself, “The central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”

The CFPB also has special roles granted by Congress to protect senior citizens, military families and other frequent targets of unfair financial practices.

As described on its own website, the CFPB was created:

“1) to ensure that consumers have timely and understandable information to make responsible decisions about financial transactions;
2) to protect consumers from unfair, deceptive, or abusive acts or practices, and from discrimination;
3) to reduce outdated, unnecessary, or overly burdensome regulations;
4) to promote fair competition by enforcing the Federal consumer financial laws consistently; and
5) to advance markets for consumer financial products and services that operate transparently and efficiently to facilitate access and innovation.”


Report | Georgia PIRG Education Fund | Consumer Protection

Big Banks, Bigger Fees

Since Congress largely deregulated consumer deposit (checking and savings) accounts beginning in the early 1980s, the PIRGs have tracked bank deposit account fee changes and documented the banks’ long-term strategy to raise fees, invent new fees and make it harder to avoid fees.

Over the last six months, PIRG staff conducted inquiries at 392 bank branches in 21 states and reviewed bank fees online in 12 others. 

Big Banks, Bigger Fees

Since Congress largely deregulated consumer deposit (checking and savings) accounts beginning in the early 1980s, the PIRGs have tracked bank deposit account fee changes and documented the banks’ long-term strategy to raise fees, invent new fees and make it harder to avoid fees. 

Report | Georgia PIRG Education Fund | Consumer Protection

Following the Money

The ability to see how government uses the public purse is fundamental to democracy. Transparency in government spending checks corruption, bolsters public confidence, and promotes fiscal responsibility.

State governments across the country have been moving toward making their checkbooks transparent by creating online transparency portals – government-operated websites that allow visitors to see who receives state money and for what purposes. Forty states provide transparency websites that allow residents to access databases of government expenditures with “checkbook-level” detail. Most of these websites are also searchable, making it easier for residents to follow the money and monitor government spending.

This report is the second annual ranking of states’ progress toward new standards of comprehensive, one-stop, one-click budget accountability and accessibility.

Report | Georgia PIRG Education Fund | Consumer Protection

Halfway to the Consumer Financial Protection Bureau

CFPB Implementation Team staff are making significant progress in their efforts to both build an effective agency and be ready to perform required functions by the transfer date (July 21, 2011). Based on our analysis of several key metrics, on the date halfway between passage and startup, the CFPB Implementation Team is properly focusing on key goals and outcomes. Moreover, the high‐quality of its early hires will give it the CFPB the ability to significantly broaden and accelerate its activities over the next six months.

At the same time, the CFPB has some major challenges before it. It must defend itself against ongoing special interest attacks and one‐sided Congressional inquiries. To achieve its full potential on the transfer date, it must have a director confirmed by the Senate who is committed to strong consumer protection. While the CFPB enabling legislation gives the Treasury Secretary authority to run the agency in the absence of a director after July 21, the confirmation of a director provides additional new powers current regulators do not have.

News Release | Georgia PIRG Education Fund | Consumer Protection

Parents Beware - Many Toys Still Toxic, Hazardous

Georgia PIRG Offers Tips and Interactive Tools to Help Consumers Shop Safely

Report | Georgia PIRG Education Fund | Consumer Protection

Trouble in Toyland

The 2010 Trouble in Toyland report is the 25th annual Public Interest Research Group (PIRG) survey of toy safety.  In this report, U.S. PIRG provides safety guidelines for consumers when purchasing toys for small children and provides examples of toys currently on store shelves that may pose potential safety hazards.

Over the past twenty-five years, the PIRG report has identified hazards in toys and children’s products that could cause an acute injury from small parts that pose a choking hazard, to strangulation hazards from cords on pull toys, to laceration hazards from edges that are too sharp.  Our report has led to at least 150 recalls and other regulatory actions over the years, and has helped us to advocate for stronger federal laws to protect children from unsafe products.

While most product safety regulations address mechanical hazards, the 2008 Consumer Product Safety Improvement Act began to address certain toxic chemicals in toys and children’s products that represent chronic hazards, such as lead and phthalates. 

In April 2010, the President’s Cancer Panel – a group of three distinguished experts appointed by President Bush to evaluate the nation’s cancer program – raised the alarm about our ubiquitous exposure to toxic chemicals. “The American people – even before they are born – are bombarded continually,” the panel wrote. In effect, our lives have become a giant, uncontrolled experiment on the relationship between toxic chemicals and our health.

American children today grow up surrounded by synthetic chemicals. Their food containers are made with plastic. Their homes and yards are treated with pesticides. Their families use cosmetics and personal-care products that contain hundreds of manufactured additives. The furniture and electronics in their homes contain flame retardant chemicals.

As their minds and bodies grow and develop, children are particularly vulnerable to chemicals that could affect proper development. Because children have a natural tendency to touch and mouth objects as a way of exploring the world around them, harmful chemicals can leach out of these products, enter their bodies and cause health problems.  Chemicals have become such a close part of our lives that scientists can find more than 100 industrial chemicals and pollutants in the bodies of every mother and child. 

There are now more than 83,000 industrial chemicals on the market in the United States. But very little is known about most of the chemicals in commerce. The health effects of almost half of the major industrial chemicals have not been studied at all.

In 2008, Congress responded to an unprecedented wave of recalls of toys and other children’s products by passing the first major overhaul of the Consumer Product Safety Commission since it was established during the Nixon Administration.  By passing the landmark Consumer Product Safety Improvement Act (CPSIA) in August 2008, Congress not only expanded the agency’s budget, it also gave the CPSC more tools to hold corporate wrongdoers accountable and speed recalls, moved toward limiting toxic lead and phthalates in certain toys and children’s products, and greatly improved import surveillance.

The Consumer Product Safety Improvement Act, together with stronger enforcement from the CPSC, has made good steps in the right direction toward reducing mechanical toy hazards like choking, and chemical hazards from lead and phthalates in certain products. However, there are tens of thousands of toxic chemicals that are still not regulated for the many uses in our children’s lives. 

In researching the report, we visited numerous national chain toy stores and other retailers in September and October 2010 to identify potentially dangerous toys. We analyzed CPSC notices of recalls and other regulatory actions to identify trends in toy safety.  This year, we focused our investigation on hazards from toys and other children’s products that contain the toxic chemicals lead and phthalates, and other metals restricted by the CPSIA.  Because choking continues to be the leading cause of death related to toys, we have also identified toys that may pose a choking hazard to children.


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