How protective orders impede public safety

Reuters reports on how protective orders sealing evidence about defective cars, drugs, and other products from public view can hide health and safety information from the public and impede government agencies -- such as the Consumer Product Safety Commission and the Food and Drug Administration -- from protecting the public. The article is here.

Robocalls up 22% in 2019

The Hill reports: Roughly 58.5 billion robocalls were made in the U.S. last year, according to new research, marking a 22 percent increase from 2018. YouMail, a company that provides a service to block robocalls, estimated that the average American received 178.3 robocalls during the year.

The full story is here.

Apps are sharing your personal information. Are they violating data privacy laws?

A report released Tuesday by the Norwegian Consumer Council, a government-funded nonprofit organization in Oslo, describes how apps on our phones systematically violate users’ privacy collecting and sharing information with third-party advertisers without users’ knowledge or consent. The report "demonstrate[s] how every time we use our phones, a large number of shadowy entities that are virtually unknown to consumers are receiving personal data about our interests, habits, and behaviour." For example, some apps share users' dating choices, location, and/or ethnicity. One app shared information with more than 300 advertisers or other companies.

The report is here. A New York Times article on the report is here.

Although the article points out that the sharing practices may violate data privacy laws, such as laws in the EU and California, the U.S. has no nationwide data privacy law.

New report on safety risks faced by travelers and limits on their legal rights

The Center for Justice & Democracy at New York Law School has released a report examining both safety risks and disappearing legal rights for commuters and business travelers. The study presents an overview of some of the most common yet dangerous methods of transportation today and explores the shrinking legal options available to individuals harmed during travel.

The report is here.

Politico report on consumer groups' opposition to proposed Community Reinvestment Act regs

Here.  Excerpt:

Community groups across the U.S. are mobilizing to oppose a plan by President Donald Trump's bank regulators to radically remake a landmark law designed to combat discriminatory lending, saying the proposal would undercut that goal.

* * *

The groups say the proposed regulation, which Otting released jointly with the FDIC on Dec. 12, will weaken the Community Reinvestment Act, a 1977 law that requires banks to lend to lower-income neighborhoods to end the discriminatory practice called redlining. It also gives regulators the power to judge how well the lenders comply, a process that banks say is often arbitrary and lacks transparency.

The activists argue that Otting's proposal would give lenders a wide berth to satisfy the law's requirements through big dollar projects — such as sports stadiums — without consulting local residents.

* * *

[Joseph] Otting, who is comptroller of the currency, has strongly defended his proposal, saying he is seeking to offer greater incentives for banks to extend loans to creditworthy borrowers in underserved neighborhoods and to think creatively about helping their communities.

 

American Banker lists 2020 congressional agenda involving banks, including CFPB issues and national usury cap

Here.  Free content. In light of the election and the divided Congress, it seems unlikely that anything controversial will pass.

Arizona payday lenders oppose minimum wage increases; one acknowledges that increasing the minimum wage may hurt business

David Dayen has the story in The American Prospect. Here's an excerpt, but the entire story is worth a look:

It may seem axiomatic, but it’s rarely stated out loud: Businesses that rely on poor people need the economic system to keep churning out poor people to survive. You almost have to applaud the payday lending industry for finally making this explicit in Arizona.

A proposed constitutional amendment that looks likely to hit the ballot there next year would limit future increases to the minimum wage, may claw back scheduled increases already set to take effect, and eliminate a week of paid sick leave. One of the payday lending industry’s leading trade associations has bankrolled the measure, making plain the connection between a lack of income and the spread of predatory financial services. * * *

* * *

* * * The annual Securities and Exchange Commission report of Elevate Financial, a publicly traded short-term lender, does contain such honesty. In a description of various risk factors to the business, Elevate writes, “Decreased demand for non-prime loans as a result of increased savings or income could result in a loss of revenues or decline in profitability … For instance, an increase in state or federal minimum wage requirements … could decrease demand for non-prime loans.”

 

Marketing profs explain why bad customer service isn't going to get better and why companies don't care

Here, in The Conversation, by Anthony Dukes, Professor of Marketing, University of Southern California and Yi Zhu, Associate Professor of Marketing, University of Minnesota. Excerpt: 

Many complaint processes are actually designed to help companies retain profits by limiting the number of customers who can successfully resolve their complaints.

Only by insisting to talk to a manager or threatening to leave the company do consumers come closer to obtaining a refund.

* * *

[N]avigating an online complaint process is generally harder for older people.

Additionally, African American and Latino customers are less inclined to complain than college-educated whites.

In addition, women get more annoyed than men when dealing with bad customer service.

This all suggests that the tiered process may hit vulnerable groups in our society harder. 

* * *

[O]ur research suggests that in markets without much competition, companies are more likely to implement a tiered complaint process and profit from the reduced payouts to customers.

Congress should really look into this. 

Senate report faults CPSC for failure to recall dangerous products

An investigation by Senator Cantwell's oversight staff found that a "series of high-profile failures to effectively recall dangerous products has called into question the ability of the U.S. Consumer Product Safety Commission (CPSC) to adequately protect American consumers from unsafe and defective products. An extensive review by U.S. Senate Committee on Commerce, Science, and Transportation Minority staff shows that these failures have not occurred due to staffing shortages or lack of legal authority. Instead, they are the result of a pattern of inappropriate deference to industry that has characterized CPSC leadership in recent years."

The report focuses on CPSC actions involving the BOB jogging stroller, the Fisher-Price Rock ‘n Play inclined infant sleeper, and residential elevator safety--three examples that it says illustrate a failure by past CPSC leadership to adequately protect consumers from the dangers of these product hazards. The report also includes recommendations to prevent such failures from being repeated.

The report is here.

California's consumer privacy law takes effect on January 1

The Washington Post today reports on the expected effect of California's consumer privacy law, which was enacted in June 2018 and takes effect on January 1, 2020. The law aims to protect consumers from having their information sold without their knowledge or consent. The article -- Calif consumer privacy law can affect businesses across U.S. -- is here.

Investigation into the smartphone tracking industry

The New York Times has a lengthy piece today on location tracking through smartphones.

Every minute of every day, everywhere on the planet, dozens of companies — largely unregulated, little scrutinized — are logging the movements of tens of millions of people with mobile phones and storing the information in gigantic data files. The Times Privacy Project obtained one such file, by far the largest and most sensitive ever to be reviewed by journalists. It holds more than 50 billion location pings from the phones of more than 12 million Americans as they moved through several major cities, including Washington, New York, San Francisco and Los Angeles. Each piece of information in this file represents the precise location of a single smartphone over a period of several months in 2016 and 2017. The data was provided to Times Opinion by sources who asked to remain anonymous because they were not authorized to share it and could face severe penalties for doing so. The sources of the information said they had grown alarmed about how it might be abused and urgently wanted to inform the public and lawmakers. After spending months sifting through the data, tracking the movements of people across the country and speaking with dozens of data companies, technologists, lawyers and academics who study this field, we feel the same sense of alarm. In the cities that the data file covers, it tracks people from nearly every neighborhood and block, whether they live in mobile homes in Alexandria, Va., or luxury towers in Manhattan.

The full article is here.

Advances or payday loans?

An article in The Atlantic yesterday reported on apps that offer "advances" on salary. Although the companies that offer the apps insist that the advances are not "loans," the article explains that the companies look a lot like payday lenders. The "advances" come with many of the same problems as payday loans, problems that have led many states to restrict or ban such loans. The article is here.

"The Decade Class Actions Were Gutted"

An article in Slate today addresses the Supreme Court's cases greatly restricting the availability of class actions as a recourse for the powerless against the powerful, largely through an atextual expansion of the Federal Arbitration Act. As the article notes, "[t]he swift decline of class actions over the last decade is regularly framed as an access-to-justice issue. But it is also a threat to the rule of law."

The article is here.

Why a Wealth Tax is Definitely Constitutional

That's the name of this article by law profs John Brooks and David Gamage. Here is the abstract:

Wealth tax reform proposals are playing a major role in the 2020 presidential campaign. However, some opponents of these wealth tax reform proposals have claimed that a wealth tax would be unconstitutional. Other prominent critics have argued that wealth tax reforms are probably unconstitutional, so that, after review by the courts, the “likeliest outcome is that a wealth tax will raise exactly zero dollars.”

These claims are wrong. More precisely, these claims are wrong conditioned on wealth tax legislation being carefully drafted so as to ensure its constitutionality. As we will explain in this essay, properly drafted, wealth tax reform legislation is definitely constitutional and thus capable of raising substantial revenues to fund new spending programs.

Constitutional scholars disagree about whether a new federal wealth tax would need to be "uniform" or "apportioned" in order to be constitutional. We explain how wealth tax legislation could be drafted to ensure its constitutionality regardless of how the Supreme Court ultimately decides on this question. In particular, we explain how Congress could design an apportioned federal wealth tax made equitable through the use of a fiscal equalization program, and could legislate this as a fallback option in case the Supreme Court were to rule against an unapportioned federal wealth tax.

EEOC flips position and decides forced arbitration of discrimination claims is totally okay.

"The EEOC voted 2-1 to rescind its position that mandatory arbitration agreements that keep discrimination claims out of court clash with the civil rights laws the agency enforces." Read about it here. 

NY Times: This Is What Racism Sounds Like in the Banking Industry

Here.  Excerpt:

Jimmy Kennedy earned $13 million during his nine-year career as a player in the National Football League. He was the kind of person most banks would be happy to have as a client.

But when Mr. Kennedy tried to become a “private client” at JPMorgan Chase, an elite designation that would earn him travel discounts, exclusive event invitations and better deals on loans, he kept getting the runaround.

At first, he didn’t understand why. Then, last fall, he showed up at his local JPMorgan branch in Arizona, and an employee offered an explanation.

“You’re bigger than the average person, period. And you’re also an African-American,” the employee, Charles Belton, who is black, told Mr. Kennedy. “We’re in Arizona. I don’t have to tell you about what the demographics are in Arizona. They don’t see people like you a lot.” Mr. Kennedy recorded the conversation and shared it with The New York Times.

 

 

Dep't of Education's continuing efforts to withhold full relief for students defrauded by Corinthian Colleges

NPR reports today on Secretary Betsy DeVos's decision to overrule the decision to forgive the federal student loans of students defrauded by now-defunct Corinthian Colleges and ITT. The story is here.

Also today, the Department announced a new methodology for determining whether and if so how much relief to provide to student borrowers defrauded by those schools. The Department's plan to provide only partial relief to defrauded students was harshly criticized by the Project on Student Predatory Lending, here.

Supreme Court Addresses Discovery Rule for FDCPA Statute of Limitations

The Supreme Court this morning decided Rotkiske v. Klemm, No. 18-328, holding that absent the application of an equitable doctrine, the FDCPA’s statute of limitations begins to run on the date on which the alleged FDCPA violation occurs, not the date on which the violation is discovered.

The question in Rotkiske was whether a discovery rule applies to the FDCPA’s statute of limitations, which provides that actions must be brought “within one year from the date on which the violation occurs,” 15 U.S.C. § 1692k(d). Stating that “the phrase ‘discovery rule’ has no generally accepted meaning,” the Court addressed two concepts—“the application of a general discovery rule as a principle of statutory interpretation and the application of a fraud-specific discovery rule as an equitable doctrine.”

With respect to the first concept, the Court held that there is no general discovery rule that applies to all FDCPA cases, refusing to read such a discovery rule into language it considered unambiguous. With respect to the second, the Court recognized that it has applied an equity-based discovery rule in fraud cases.  The Court stated, however, that the petitioner could not rely on that equitable doctrine because he had failed to preserve the issue in the court of appeals or raise it in his petition for certiorari. The Court therefore affirmed the court of appeals, which had held that the action was untimely.

Justice Sotomayor filed a concurrence, emphasizing that the Court has long recognized and applied an equitable, fraud-specific discovery rule, and that “[n]othing in today’s decision prevents parties from invoking that well-settled doctrine.” 

Justice Ginsburg dissented, disagreeing with the majority about whether the petitioner preserved an argument based on a fraud-based discovery rule and explaining that, in her view, his complaint fell comfortably within the doctrine.

Professors who want an electronic version of the forthcoming new edition of our consumer law casebook . . .

by Jeff Sovern

. . .  can get it here, by speaking to a West representative, or by clicking this link: https://signin.westacademic.com/Security/Login?redirect=%2fSAML%2fSSOService%3fSAMLRequest%3dfZJdT8IwFIb%252FytL7fQICDSNBiHEJ6sLQC29M6c6gydbOng7w39sNVLyApDc9X%252B%252FT93SCrCprOmvMTq7gswE0TrKIyQeMNgPo3Y3dzXBcuP2ox93RqA%252FuuM8DPrC5MAiI8wYahZIxiTx7SxAbSCQaJo0NBeHYDSM3DNZRRAN7Bt5w8E6chRURkpmucWdMjdT3UWylkN7B5hhnOVSCe1xVfjZ7WvpZ9pKB3gsOxHlQmkPHG5OClQitbsoQxR5%252BI6lWRnFV3guZC7mNSaMlVQwFUskqQGo4bSdTy003pyKkj%252Bt16qYv2Zo4M0TQLeFcSWwq0Gf919XyjxmOfMfkFq5QX5vhMayPxDlWpUTa%252BX%252Bbrz4%252FhkwnbTXtbNYX%252Fbfb2Q8GmV4FnvgXk08yNX22o5JFqkrBv1rbK2auK4Ve2EVE7hZdKW0k1sBFISC3fpalOsw1MGOXZHRjd%252BRPT6r%252Ff9%252F0Gw%253D%253D%26RelayState%3d%252FDocumentDisplay.aspx%253FDocID%253D26704%2526f%253D1%2526navTabIndex%253D1. 

More information here.

FTC settles deceptive advertising charges against University of Phoenix

The Federal Trade Commission announced today that it has settled with the University of Phoenix and its parent company, Apollo Education Group, for a record $191 million to resolve FTC charges that the school used deceptive advertisements that falsely touted their relationships and job opportunities with companies such as AT&T, Yahoo!, Microsoft, Twitter, and The American Red Cross. Under the settlement, University of Phoenix will pay $50 million and cancel $141 million in debts owed to the school by students who were harmed by the deceptive ads.

The FTC's press release, with links to the FTC's complaint and the settlement, is here. University of Phoenix's press release and other statements about the case are here.

Arbel & Shapira article on nudniks and consumer activism

Yonathan A. Arbel of Alabama and Roy Shapira of the Stigler Center, University of Chicago Booth School of Business, have written Theory of the Nudnik: The Future of Consumer Activism and What We Can Do to Stop it, forthcoming in the Vanderbilt Law Review.  Here's the abstract:

How do consumers hold sellers accountable and enforce market norms? This Article contributes to our understanding of consumer markets in three ways. First, The Article identifies the role of a small subset of consumers—the titular ‘nudniks’—as engines of market discipline. Nudniks are those who call to complain, speak with managers, post online reviews, and file lawsuits. Typified by an idiosyncratic utility function and personality traits, nudniks pursue action where most consumers remain passive. Although derided in courtrooms and the court of public opinion, we show that nudniks can solve consumer collective action problems, thereby leading to broad market improvements.

Second, the Article spotlights a disconcerting development: Sellers’ growing usage of Big Data and predictive analytics allows them to identify specific consumers as potential nudniks and avoid selling to or disarm them before they can draw attention to sellers’ misconduct. The Article therefore captures an understudied problem with Big Data tools: sellers can use these tools to shield themselves from market accountability.

Finally, the Article evaluates a menu of legal strategies that would preserve the benefits of nudnik-based activism in light of these technological developments. In the process, we revisit the conventional wisdom on the desirability of form contracts, mandatory arbitration clauses, defamation law, and standing doctrines.

Can Devin Dodge Dendrite to Doxx and Damage Devin’s Cow?

by Paul Alan Levy

In pursuit of his frivolous libel suit against Devin Nunes’ Cow and other defendants in Henrico County, Virginia, Congressman Devin Nunes has served subpoenas on Twitter, on a local political consultant, and on a Richmond law firm, demanding information that would provide the identity of the owner of the Devin Nunes’ Cow account. Nunes is not, so far as we can tell, pursuing his subpoena to Twitter, because the Virginia Supreme Court held in the Hadeed case a few years ago that Virginia plaintiffs cannot assert subpoena jurisdiction over out of state companies to obtain identifying information; and the consultant, so far as we know, does not have any identifying information (although his motion to quash the subpoena is highly entertaining).  But the Richmond law firm may well have that information, so this morning Public Citizen, along with the ACLU and the ACLU of Virginia, is filing a brief as amicus curiae  in support of the law firm's own motion to quash, arguing that enforcement of the subpoena to identify Devin Nunes’ Cow would violate the First Amendment.

In that regard, we are taking up the unfinished business from Yelp, Inc. v. Hadeed Carpet Cleaning. Yelp had two arguments in the Virginia Supreme Court – lack of subpoena jurisdiction, and the First Amendment right to speak anonymously. In ruling for Yelp on the first question, the Virginia Supreme Court was able to postpone for another day the decision on the second question (the Virginia Court of Appeals had ruled against Yelp on the First Amendment issue; that ruling was vacated by the state supreme court). Our amicus brief argues that because Nunes has sued over rhetorical hyperbole and because he has presented no evidence that any factual statements his Twitter detractors may have made against him are false, his effort to use judicial power to compel the disclosure of Devin Cow’s real name runs headlong into the First Amendment.  It was a Public Citizen amicus brief, joined by the ACLU that first proposed the Dendrite standards in Dendrite International v. Doe.  We have been pursuing that issue from state to state ever since.

Virginia has never decided whether it will follow the roughly dozen states whose courts demand valid legal claims and evidence of wrongdoing before they will compel identification of anonymous critics, but our brief also addresses this anomaly: California, where Nunes lives, follows the Dendrite standard (or, more precisely, the Doe v. Cahill variation on Dendrite, adopted in another case where we had teamed up with the ACLU to file an amicus brief on this issue). Why should Nunes be allowed to take his libel claims to Virginia, to pursue an anonymous critic who may well herself be in California (her parody name has her living on the Nunes family farm), and yet fail to follow California law?

This aspect of our brief points to the disturbing pattern of libel tourism by Nunes, who has plainly decided that Virginia provides a more hospitable forum in which he can harass his critics through frivolous libel litigation. Another major difference between the two states is that California has a vigorous anti-SLAPP law, while Virginia’s is very weak. It is my view that the California SLAPP law should follow Nunes to Virginia under proper choice of law principles, but that problem may well be alleviated in the Virginia legislature this coming year – a new, strong anti-SLAPP bill is being offered,  and we can hope that Virginia’s elected officials will save the Commonwealth from having its reputation sullied as the preferred venue for libel tourism, a status that London had suffered until recent changes in the law there.

Chanrasekhar & Horton paper examines the source of the repeat player effect in consumer arbitration

Andrea Chandrasekher and David Horton, both of California--Davis, have written Empirically Investigating the Source of the Repeat Player Effect in Consumer Arbitration. Here's the abstract:

Policymakers, courts, and scholars have long been interested in whether repeat players enjoy an advantage in forced arbitration. Sophisticated empirical studies of consumer and employment awards reveal that there is indeed a repeat player effect: even controlling for other factors, companies that arbitrate more than once boast higher win rates than one-shot firms. However, researchers have not yet tried to determine whether this repeat player effect is a product of experience within the arbitral forum (the “experience” hypothesis) or characteristics of the repeat playing companies themselves (the “defendant-specific” hypothesis). This Article begins to address this issue by analyzing 4,570 consumer arbitration awards from the American Arbitration Association. Using a unique regression specification that includes both discrete and continuous random variables (a combination of functional forms not used in previous literature), it finds that the repeat player effect is more consistent with the defendant-specific hypothesis than it is with the experience hypothesis. Indeed, to the extent that repeat-playing businesses enjoy an advantage in arbitration, it likely emanates from company-specific characteristics.

House passes anti-robocall bill

By a vote of 417-3, the House of Representatives today passed a bill restricting robocalls. The TRACED Act would require phone companies to block robocalls without charging customers any extra money, require most carriers in the U.S. ensure that calls are coming from real numbers, and expand government authority to penalize robocallers.

The Hill reports that the Senate is expected to vote on the bill in the next coupe of weeks. The story is here.

Dept of Education discloses that it tried to collect from even more Corinthian Colleges students -- in violation of a court order

The Department of Education stated in a court filing this week that it had pursued 29,000 more former Corinthian Colleges students for federal student loan payments than it had previously identified, despite a court order barring collection.

As we noted in a post in October, a federal judge held Education Secretary Betsy DeVos in contempt and fined the department $100,000 after the agency said it attempted to collect payments from 16,000 former students in violation of the order.