CL&P Blog

Is it Unethical to Match Consumers with Lawyers Online?

by Greg Beck

Web startup Avvo.com jumped into the business of rating lawyers this month and almost immediately found itself the defendant in a lawsuit that seeks to certify a class of all lawyers rated by the system.  The suit claims that the rating system is arbitrary, noting that the dean of Stanford Law School was rated as “average,” while Lynne Stewart, who was convicted of providing material support to terrorists and disbarred, received a rating of “very good.”  According to the complaint, the site engages in unfair and deceptive practices by “encourag[ing] consumer trust in a fallible system.” 

As Eric Goldman points out in his Technology & Marketing Law Blog, the design of Avvo's system may take it outside the immunity for website publishers afforded by the Communications Decency Act.  But while the site could likely be redesigned in a way that protects it from liability under the CDA, the complaint raises another troubling issue by claiming that running the website is a violation of state attorney ethics rules.

Why Don’t More Elite Law Schools Offer Consumer Law Courses?

by Jeff Sovern

Recently I asked a research assistant to review the web sites of several top law schools to see if they offer courses in consumer law.  Though the web sites may not necessarily report accurately what course are offered (courses are sometimes added and dropped at the last minute, etc.), to the extent that the web sites are accurate, they are disappointing.  Among the schools that appear not to offer a basic consumer protection course are Yale, Columbia, NYU, Virginia, Stanford, Chicago, Michigan, and Texas.  Georgetown offers a comparative consumer protection course (comparing US and European laws) while Harvard has a Predatory Lending/Consumer Protection Clinical Workshop.  I’ve heard that Penn and Boalt will offer consumer law courses next year. 

Of course I have a personal stake in more law schools teaching consumer law. Not only have I co-authored a consumer law casebook, as regular readers of the blog know, but more full-time professors in the area would probably increase the amount of consumer law scholarship.  In addition, professors at such schools could be expected to enhance both the quality of such scholarship and professorial conversations about consumer law topics.  All this would benefit me personally. 

But the rest of you also have such a stake in elite schools teaching consumer law.  Consumers and consumer lawyers would benefit if more law students at elite schools were exposed to consumer protection laws.  Many of the graduates of these schools become leaders in law-making, serving on the bench or in legislatures, and if they better understood the relevant legal issues, we might get better consumer protection laws. These schools disproportionately feed the law professoriate, and also serve as models for non-elite schools, and so more non-elite law schools would probably offer consumer protection courses too.  Doctrinal law school classes tend to provide a balanced approach to consumer protection issues, exposing students to the policy arguments on behalf of both consumers and industry. Thus, perhaps graduates of these schools who go on to represent lenders, say, would better understand the costs of their recommendations to their clients. Perhaps more graduates of such schools would be interested in representing consumers if they were more familiar with consumer laws. 

NCLC Reports on Big Name Banks' Support of Payday Lenders

Over at the Consumerist you'll find this nice discussion of a new National Consumer Law Center report on the relationship between some of the biggest banks and your friendly local payday lender.  Yes, Bank of America, Wells Fargo, JP Morgan, and others are bankrolling the payday lending industry to the tune of hundreds of millions of dollars in lines of credit. (But they don't sell payday loans at their local branch banks, do they?).  The Consumerist characterizes what it learned from NCLC's report this way:  "Kinda like finding out the local hardware store owner sells crack on the side."

Supreme Court Grants Important Preemption Case

The Supreme Court just announced that it has granted an important case on federal preemption of suits by consumers injured by medical devices.  The case, which we've blogged about previously, is Riegel v. Medtronic, and the question presented is whether the Medical Device Amendments to the Food, Drug, and Cosmetic Act preempt state-law suits seeking damages for injuries from medical devices that have received FDA pre-market approval.  My colleague Allison Zieve represents the consumer petitioner.  Although the state and federal courts have been split on this issue for many years, the Court has previously denied several similar petitions on the same question.   Just as in was in the pesticides preemption case a few years ago (Bates v. Dow Agrosciences), the Court's decision to grant this case is an encouraging sign.  Here's the cert petition in Riegel, and here are some previous posts with more on the case:

Should Premarket Approval Be a Liability Shield? (Allison Zieve)

Supreme Court Asks for Solicitor General View's in Important Preemption Case (Brian Wolfman)

U.S. Firms Prepare for European Class Actions

Today's Legal Times has an interesting article on the rise of consumer class actions in Europe.  "The next hot American import in Europe may well be class action litigation.  In recent months a number of U.S. firms have been positioning themselves in anticipation of a potential fusillade of class actions across the Atlantic. . . . Although there has been very little class action litigation in Europe to date, the United Kingdom, the Netherlands, Germany, Sweden and Portugal already allow some form of group or class action-style litigation. Other European countries are considering following suit, and the European Commission has been clamoring for more private enforcement of competition law."

Consumer Law Resources from Georgetown Law School

Georgetown University Law Center has this on-line list of research tools concerning consumer law.  Many of the resources are available on line.  It provides a good start for the consumer or consumer advocate looking to do some research.

Federal Student Loan Legislation Moving Through Congress

Today's Washington Post includes this story on the student loan (and grant) reform legislation moving rapidly through the U.S. House and Senate.   Insiders predict that the legislation - - which would cut $19 billion in subsidies to lenders, increase subsidies for students, and liberalize repayment rules - - could be enacted in the next month or two.  Among other things, the legislation would gradually increase the size of Pell grants, the main federal grant program for low-income students.

Oregon Curbs Payday Lenders

    by Scott Nelson

   Oregon Governor Ted Kulongoski yesterday signed into law a package of bills designed to protect consumers against abuses by the payday lending industry and other short-term lenders that target vulnerable borrowers with high-interest loans.  Together, the new laws will, among other things, cap interest rates, limit rollovers of short-term loans, and attempt to regulate internet transactions.  Importantly, the interest rate caps are not limited to specific loan products -- which would facilitate evasion as lenders responded by modifying their loans to take them outside the laws' restrictions -- but apply to all consumer finance loans involving amounts less than $50,000.

  The new laws should significantly ease the triple-digit interest rates charged by payday lenders and their cousins, auto title lenders.  Indeed, payday lenders say the new laws will drive them out of the state altogether.  Whether that is so remains to be seen, but the laws still allow payday lenders, through a combination of interest rates and "origination fees," to charge effective annual interest rates of well over 150% on one-month loans.

Background of the New Laws

  Oregon, like many other states, had effectively repealed its usury laws in 1981, when a law imposing an interest rate cap of 36% on consumer loans was repealed.  In recent years, the payday lending industry had taken full advantage, charging interest rates that often exceeded 500% annually.  One frequently cited measure of the industry's penetration of the Oregon market is that the number of payday lenders operating in the state substantially exceeds the number of McDonald's franchises (though this is true in most other states as well, according to a researcher at California State University - Northridge).

Intellectual Property Abuse, eBay, and Consumers

by Greg Beck

InfoWorld’s Ed Foster has an interesting piece on a growing problem for consumers: intellectual property abuse on eBay.  As I’ve previously written, some companies would rather if consumers did not have the option of buying less-expensive used products online. By taking advantage of the Digital Millennium Copyright Act's takedown provisions, companies claiming copyright infringement can automatically remove used or competing products from the Internet without having to go to court.  Foster correctly notes that wrongful claims of trademark infringement can be a bigger problem than copyright.  Unlike copyright claims, trademark claims provide the target with none of the DMCA's procedural protections for wrongful terminations. Thus, companies are able to terminate any eBay auction at will, leaving the target without any recourse short of filing a lawsuit and obtaining a declaratory judgment.

The examples of abuse are numerous. Last year, Public Citizen filed suit against a company targeting low-priced generic competition in this way.  The company agreed to reimburse the seller for his lost sales.

How Bad Patents Hurt Consumers

by Greg Beck

Carfax has a new patent on an "apparatus and method for perusing selected vehicles having a clean title history." Parsing the patent's jargon and legalese, the Electronic Frontier Foundation concludes that the patent covers the process of searching a database for a used car with a clean title. This idea is obvious, and one that many consumers could benefit from.  But, as the EFF points out: "The current state of patent law allows for all sorts of ridiculous claims that wouldn’t pass muster if basic common sense principles were applied."

Patents are government sponsored monopolies.  When a patent is handed out for an obvious idea, like searching a database for cars, the patent owner can prohibit competition that would create more options and lower prices for consumers.  Or, the patent owner can stay out of the marketplace entirely but extort licensing fees from those who wish to enter the market.  These "patent trolls" create higher costs of entry, meaning that fewer new competitors will enter the market, and those that do will charge a higher price to pass along the licensing fees to consumers.