CFPB Will Issue A Report On Mandatory Arbitration

The Washington Post (3/3, Marte, 5.17M) reported that the Consumer Financial Protection Bureau “is expected to issue a major report next week on what consumer advocates say is one of the leading but most misunderstood ways that companies limit a customer’s rights, people familiar with the matter said.” The practice “is called ‘mandatory arbitration,’ which bars consumers from filing class action lawsuits or taking other steps to seek relief after they feel a company has wronged them.” The Post notes that such arbitration clauses “are often found in the fine print of credit cards, payday loans and auto loans.” Consumers “instead are steered into arbitration, which critics say is a secretive process that is often stacked in the company’s favor and leads to little benefit for consumers. ‘The unfairness here is incredibly widespread,’ says David Seligman, staff attorney at the National Consumer Law Center.” Consumer advocates say that most people”aren’t aware these agreements exist until after they feel they’ve been wronged and attempt to sue a company or seek some other form of retribution.”


People Who Buy Used Cars Are Responsible For Asking About Hidden Safety Recalls

The New York Times (1/30, Tabuchi, Subscription Publication, 9.97M) reported, after several high-profile deaths of used cars involving airbag recalls, Federal laws “do not require used-car dealers to repair vehicles with safety defects before putting the cars back into public use. Nor are dealers required by law to disclose to customers that a vehicle is the subject of a recall.” Legislation to change this loophole has stalled in Congress leaving consumers on their own to check if a used vehicle has been recalled for a safety defect by either running a car’s VIN number through the Federal safety database, checking an automobile manufacturer’s website, or by purchasing a vehicle history report from a vendor such as Carfax. NHTSA will continue to push for Congress to “prohibit used-car dealerships from selling vehicles with an open recall and the rental of vehicles with an open recall.”


Bus Company Should Have Been Shutdown Before Crash In Virginia

According to USA Today, hours after one of its buses rolled over on a Virginia highway and killed four passengers, the federal Department of Transportation closed down a North Carolina bus company.  The shutdown came months after the company had been given one of the worst safety records in the United States.  For the past two years, Sky Express of Charlotte, N.C. repeatedly violated federal rules that require bus companies to keep fatigued drivers from getting behind the wheel and to make sure their drivers have proper licenses, and medical certificates.  The Federal Motor Carrier Safety Administration had access to all of the information relating to the company’s terrible safety record, but allowed it to stay in business.

Sky’s Express’ score in driver fitness demonstrates that its record was worse than 99.7% of the nation’s bus operators.  The company had been caught seven times allowing drivers to work excessive hours since October 2009.

According to the USA Today, The Federal Motor Carrier Safety Administration on April 12, 2011 proposed shutting the company down after a safety review.  Sky Express appealed the shutdown proposal on May 11, 2011. The Federal Motor Carrier Safety Administration rejected the appeal two days later.  According to the Federal Motor Carrier Safety Administration, Sky Express could not be shut down immediately because it says it had to wait 45 days from when it proposes a shutdown.  Instead of shutting down Sky Express after 45 days, the agency decided instead to investigate new safety concerns.

The USA Today article stated that the Virginia State Police blamed the rollover crash on driver fatigue.  The Sky Express bus was carrying 58 passengers from Greensboro, N.C., to New York City when it ran off Interstate 95 near Richmond, Virginia near dawn and rolled over.  Fifty-four people were injured in the incident.  The driver, Kin Yiu Cheung, was not seriously injured and was charged with reckless driving

The Sky Express collision in Virginia is typical of many bus accidents. A tired driver drifted off a highway causing bus crash in 2008 that killed nine passengers in Utah. Similarly, in Arkansas in 2004 bus crash caused by a fatigued driver who drifted off the road killed 14 passengers and the driver, according to report by the National Transportation Safety Board.

Transportation Secretary Ray LaHood got involved and made sure the North Carolina bus company was finally shut down.  LaHood criticized his own agency by saying:

I’m extremely disappointed that this carrier was allowed to continue operating unsafely when it should have been placed out of service.

The Federal Motor Carrier Safety Administration is an agency of the United States Department of Transportation and is in charge of bus and truck safety.  LaHood criticized the agency for stretching its investigation beyond May 28, 2011 and ordered an immediate halt to such extensions, which federal rules allow but do not require before a bus company can be closed.  According to the Department of Transportation, eight bus companies facing closure have received extensions in 2011. It appears that LaHood will clamp down on his agency and will require it to do its job much better.  LaHood stated the following:

There is no excuse for delay when a bus operator should be put out of service for safety’s sake.  On my watch, there will never be another extension granted to a carrier we believe is unsafe.

The safety agency does in-depth examinations of companies that accumulate the most safety violations in random roadside inspections.  It says violations alone cannot be the basis to shut down a company.  The agency targets oft-cited companies for more thorough reviews and can issue a closure order after a review.  LaHood says he plans to propose in December that the safety agency be allowed to close bus companies with excessive safety violations and without a fuller review.

There are numerous examples of passenger injuries that result from driver fatigue.  On March 2, 2011 a bus crashed near New York City killing 15 passengers.  Investigators are looking into whether fatigue caused that crash.  The company operating that bus, World Wide Travel of Brooklyn, N.Y. had five violations of fatigued-driving rules in the 22 months prior to the crash.  Bus drivers may drive up to ten straight hours before being required to take eight hours off, and can work 15 hours, which include non-driving time, before having to take an eight-hour break.  The time-off requirements are not adequate to ensure drivers are sufficiently rested. 

Source: USA Today

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