"Ringless voicemails" to cell phones are subject to robocalling restrictions

The Federal Communications Commission recently issued a unanimous decision on ringless voicemails — that is, messages left in voicemail boxes without ringing the consumers' cell phones. The FCC determined that ringless voicemails are “calls” and, therefore, require consumers’ prior express consent under the Telephone Consumer Protection Act.

The FCC's press release and ruling are available here.

CPSC issues rule to protect children from strangulation by window covering cords. Industry association sues.

Nearly half of the children caught in cords for shades, blinds, or other window coverings die -- close to 100 kids died of strangulation from window covering cords in 2021 -- according to data from the Consumer Product Safety Commission.

Two years ago, Canada announced a regulation strictly limiting the length of window covering cords and adopting other requirements to protect children. The regulation went into effect earlier this year.

On November 28, the CPSC issued a similar regulation. The CPSC regulation applies to window coverings manufactured after after next May.

Two days later, the Window Coverings Manufacturers Ass'n sued the CPSC, trying to block the rule. The case is pending in the D.C. Circuit.

Tobacco companies challenge California law barring sales of flavored tobacco products

Having lost a motion for a preliminary injunction in the lower courts, various tobacco companies are asking the Supreme Court to enjoin a California law banning the sale of flavored tobacco products from going into effect as scheduled on December 22. The companies argue that the federal Tobacco Control Act preempts the state law and that enjoining the stat law is in the public interest.

The request for an injunction is here. Th Hill reported on the filing here.

Appeal tests corporate strategy to bar mass arbitration

Alison Frankl at Reuters writes that a pending appeal asks the Ninth Circuit to approve arbitration provisions that block "mass arbitrations."

As the article explains: "Verizon’s consumer contract, in essence, eliminates consumers’ ability to arbitrate en masse, thus neutralizing their leverage from the steep initial arbitration fees companies are required to pay under AAA rules. The telecom’s consumer contract mandates that if more than 25 customers who are represented by the same plaintiffs' firm file similar demands for arbitration, the cases are to be arbitrated in batches of only 10 at a time, five picked by plaintiffs' lawyers and five by defendants."

Consumer lawyers worry that the provisions are designed to increase the cost of prosecuting claims by consumers, while reducing corporations' defense costs.

The issue arose in a case against Verizon in which customers claim that the company deceptively tacked on administrative fees to their monthly wireless bills.

Briefing is underway. No argument date has been set.

WSJ: Credit repairers deluging credit bureaus and FTC with false ID theft claims, impairing credit report accuracy and slowing the granting of loans

Here, in an article by AnnaMaria Andriotis, an excellent reporter on consumer protection issues (behind paywall). The practice, known as credit washing, often leads to temporary removal of the damaging item from the consumer's credit report, and a correspondingly evanescent improvement in the consumer's credit score. Excerpt:

Credit washing has slowed down the process of getting loans at some banks while lenders look for other ways to evaluate potential borrowers. It has added to questions about how useful credit scores really are and eroded banks’ confidence in the credit-reporting system they have relied on for decades.

Equifax, Experian and TransUnion get millions of letters each year that allege errors on credit reports, many claiming identity theft, according to people familiar with the matter. It isn’t known how many are illegitimate claims. Sometimes the companies receive batches of similar letters claiming identity theft or other issues at once—mailed from the same ZIP Code on the same date, some with the same typos, according to the people and documents reviewed by The Wall Street Journal.

Study finds 83% of consumers agreed to social network terms of service that obliged them to provide kidney or eyeball

Jonathan A. Obar of the Department of Communication Studies at York University and the Quello Center at Michigan State and Anne Oeldorf-Hirsch of the Department of Communication at Connecticut have written Older Adults and 'The Biggest Lie on the Internet': From Ignoring Social Media Policies to the Privacy Paradox, 16 International Journal of Communication 4779 (2022). Here's the abstract:

Older adults (50+) may self-report online privacy concerns and claims of protective behaviors, but what happens when actual privacy behaviors are assessed? An experimental survey (N = 500) evaluated older adult engagement with the online consent process for a fictitious social networking service called NameDrop. Results demonstrate 77.6% chose the clickwrap, agreeing to the privacy policy (PP) without accessing it. For those accessing policies, average PP reading time was about 70 seconds, 81.4 seconds for terms of service (TOS). Participants convey an interest in protections but find policies long, complicated, and impeding a desire to join services quickly. Results also suggest two examples of the privacy paradox: for clickwrap use and for policy reading time. To address these ignoring behaviors, digital service providers should offer support by addressing problematic designs like clickwraps and long/complicated policies. Findings emphasize implications as 91.4% of participants accepted the NameDrop PP, which included data collection/sharing “gotcha” clauses, while 83.4% accepted the TOS, including an extreme clause requiring users to provide a kidney or other “redundant organ” in exchange for service.

CPSC tips for holiday cooking, decorating and toy shopping; CPSC report on toy-related injuries

The Consumer Product Safety Commission today issued "Top tips for Holiday cooking, decorating and toy shopping." Scroll down on this page.

CPSC also issued a report called Toy-Related Deaths and Injuries for 2021. According to the report, there were more than 152,000 toy-related, emergency department-treated injuries to children younger than 15 years of age, including two deaths, in 2021. The fatalities involved choking on a small part of a toy and suffocating on a soft toy in an unsafe sleep environment. Frequently, these injuries involved lacerations and contusions, and abrasions to the child’s face and head. Importantly, many of the incidents were associated with, but not necessarily caused by, a toy. For children younger than 15 years old, non-motorized scooters continued to be the category of toys associated with the most injuries. Males accounted for 58 percent of all of the injuries.

FTC releases data on do-not-call registry, robocall complaints, and consumer complaints

The Federal Trade Commission today released the National Do Not Call Registry Data Book for Fiscal Year 2022. The Data Book provides the most recent fiscal year information available on robocall complaints, the types of calls consumers reported to the FTC, and a complete state-by-state analysis.

According to the Data Book, complaints about imposter calls again topped the list, with almost 287,000 received during the fiscal year ending on September 30, 2022, including both live calls and robocalls. In such calls, imposters falsely pose as government representatives, such as the Social Security Administration or the IRS, legitimate business entities, or as people affiliated with them.

The FTC reports that, in the last fiscal year, more than 2.5 million people signed up with the Do-Not-Call Registry, bringing the total to more than 246 million phone numbers.

CFP: IACL Conference in Germany: Challenges and Unanswered Questions of Consumer Law

We received the following call for papers. More information is available here.

18^th International Association of Consumer Law Conference (IACL)

Topic: Challenges and Unanswered Questions of Consumer Law

CALL FOR PAPERS

Abstract submission deadline: 16 December 2022
Feedback: 20 February 2023
Guidelines: max. 300 words, 5-7 keywords
Dates: Wednesday, 19 July 2023 – Friday, 21 July 2023
Venue: Rudolf Steiner Haus, Mittelweg 11-12, 20148 Hamburg, Germany

The 18th conference of the International Association of Consumer law will be organized around the theme of “Challenges and Unanswered Questions of Consumer Law”. We kindly invite participants from around the world to submit an abstract (max. 300 words, with a deadline of 16 December 2022) of a paper they would like to present during the conference. Abstracts and inquiries should be submitted to contact@iacl2023.com. Please note that no interpreters will be available for language translations.

The conference will run from approximately 9:00 AM on Wednesday, 19 July to 2:00 PM on Friday, 21 July 2023. It will be held at the Rudolf Steiner Haus in Hamburg, Germany. The goal of this conference is to provide a forum where leading international scholars, practitioners, representatives of consumer organizations, public authorities and business can gather together to present and discuss issues relevant to consumer protection in many sectors and from various perspectives. We welcome both theoretical and empirical submissions.

Conference organizers are hoping to offer a publication opportunity of selected papers in well-known journals. Furthermore, all papers will be published on the conference website. Nevertheless, all authors are free to publish their work in other venues as they choose.

TOPICS

Challenges and Unanswered Questions of Consumer Law. Technological developments in the area of consumption challenge traditional ideas of consumer contracts as only bilateral agreements. While traditional law focuses on institutions such as banks, insurance companies, department stores etc., technological developments increasingly lead to a focus on functions such as banking, insurance and sales, which can be offered by very different and less controlled entities. Intermediaries use the platform economy to link newcomers with consumers who may have different grades of access. Thus, supervisory institutions which are mostly organised on the national level lose influence while consumer contract law is increasingly relevant for issues of the public good.

Within the general theme, presenters might reflect on past successes (and failures) of consumer law and policy in a particular area of commerce, opportunities for moving consumer law in a different direction, or the potential threats to consumer welfare (particularly the impact of changes in the political landscape in some parts of the world). Papers focusing on consumer law in individual countries are welcome, as well as papers with an international focus.

See website for details on possible topics and other details.

CFPB report finds credit reporting failures, junk fees, and mishandling of COVID-19 protections

The Consumer Financial Protection Bureau has released a new Supervisory Highlights report on legal violations identified during the CFPB’s supervisory examinations in the first half of 2022. The report details key findings across consumer financial products and services, including how consumer reporting companies and data furnishers continued to violate the Fair Credit Reporting Act by failing to promptly address and update incorrect information on credit reports. The report also highlights instances where mortgage servicers charged impermissible fees when homeowners went to make their mortgage payments.

The report is here.

NCLC's Lauren Saunders on the practical implications of the Fifth Circuit's ruling that CFPB funding is unconstitutional

Lauren Saunders of the National Consumer Law Center has written "Practice Implications of Fifth Circuit Ruling That CFPB Funding Unconstitutional." Read it here.

Texas judge strikes down federal student debt relief plan

As NPR reports, "President Biden's plan to erase federal student loan debts for tens of millions of borrowers hit a legal wall Thursday, when a U.S. District Court judge in Texas called it unlawful and vacated the debt relief program. The federal government immediately appealed the decision, which came just weeks before student loan payments are set to resume in January. The program was already on hold while a federal appeals court in St. Louis considers a separate lawsuit by six states challenging it."

The decision is here. The Department of Education released a statement, here.

Raba Report: Co-Opting California Courts: How Private Creditors Have Turned the Judiciary Into a Predatory Student Debt Collection Machine

Claire Johnson Raba of Irvine has written Co-Opting California Courts: How Private Creditors Have Turned the Judiciary Into a Predatory Student Debt Collection Machine. Here is the abstract:

In a report, Claire Johnson Raba, a SBPC fellow and clinical teaching fellow at the University of California Irvine School of Law’s Consumer Law Clinic, shows the effect of predatory private student loan collection practices on borrowers in California. With creditors dragging borrowers into court for debts they often do not owe and lacking the documents necessary to back up their claims, the report lays out the harmful long-term impacts to borrowers’ credit and finances.

With over 12,500 California borrowers having faced private student loan debt collection lawsuits over the past 13 years from large, out-of-state creditors including the National Collegiate Student Loan Trusts, lawmakers in the state are moving forward legislation that would protect borrowers from these harmful practices.

NCLC Report on Reg F finds consumers still struggling to understand validation notices

Here. Some other notable findings:

Requests to stop particular types of communication are often ignored by collectors. Most survey respondents indicated that debt collectors generally do not comply with requests from consumers to cease contacting them via a particular method of communication—in violation of Regulation F.

* * *

Collection of time-barred debts continued, including suits and threats of suits. A majority of consumer advocates reported that debt collectors are still collecting time-barred debts after November 30, 2021. Even with disclosures, consumer advocates reported that consumers find this concept confusing. Moreover, some consumer advocates reported that debt collectors continue to sue and threaten to sue on time-barred debts, although this was prohibited by Regulation F.

State-owned nursing home asks Supreme Court to limit patients' right to sue

Tomorrow, the Supreme Court will hear arguments in Health & Hospital Corp. v. Talevski, which poses the question whether people who depend on initiatives that are funded in part by the federal government — such as Medicaid and programs that provide services for nutrition, housing and disabilities — can states when their rights are violated. Here is how the plaintiff's brief sums up the case:

Respondent Gorgi Talevski was a resident of Valparaiso Care and Rehabilitation (VCR), a government nursing home in Valparaiso, Indiana. He had dementia. VCR found caring for him difficult, so it administered psychotropic drugs to restrain him, then involuntarily transferred him to another facility. The Federal Nursing Home Reform Act (FNHRA) specifies that nursing homes in the Medicaid program “must protect” “the right” of “each resident” to be “free from ... chemical restraints imposed for purposes of discipline or convenience,” 42 U.S.C. § 1396r(c)(1)(A)(ii), and “must not transfer or discharge the resident” without notice and consent except in narrow circumstances not present here, § 1396r(c)(2)(A). The Civil Rights Act of 1871 provides a cause of action against any person who, under color of state law, deprives another of “any rights, privileges, or immunities secured by the Constitution and laws.” § 1983. Respondent’s wife, his guardian, sued VCR and its affiliates under § 1983 on his behalf for violating his FNHRA rights. The questions presented are:

1. 1. Whether this Court should overrule a half-century of precedent that has consistently interpreted § 1983 as capable of securing “rights” under “laws” enacted pursuant to the Spending Clause.
   2. Whether the Federal Nursing Home Reform Act’s rights against chemical restraint and improper discharge and transfer are federal rights that § 1983 protects.

The full docket, with links to all the briefs, is here.

An NPR story, about the case, "A SCOTUS nursing home case could limit the rights of millions of patients," is here.

Conti-Brown's and Feinstein's article finds grade inflation in CRA ratings

Peter Conti-Brown of Penn's Wharton School and the Brookings Institution and Brian D. Feinstein, also of Wharton have written Banking on a Curve: How to Restore the Community Reinvestment Act, Harvard Business Law Review, Forthcoming. Here's the abstract:

The federal government’s primary financial-regulatory tool for combating wealth inequality is broken. Intended to push banks towards deeper engagement with lower-income and minority communities, the Community Reinvestment Act (CRA) of 1977 has failed to meaningfully reduce the prevalence of “banking deserts” across lower-income communities or to reduce the racial wealth gap. As regulators circulate a proposed overhaul and the prospect of generational reform appears within reach, there is a danger that the CRA’s current moment in the sun will pass without the law being substantially improved.

This Article argues that the roots of the CRA’s problems are supervisory: bank examiners have severely skewed CRA examination scores to presume success in community lending. The Article documents, for the first time, the extreme grade inflation in examinations, with 96 percent of banks receiving one of the top two ratings. Given the persistence of underinvestment in lower-income and minority communities, that result beggars belief.

As a corrective, banks should be graded on a curve, with a certain percentage of institutions slotted in most grade categories—including, importantly, the categories that prevents banks from pursuing new business opportunities. This reform—which, to maximize its effectiveness, should be enacted in tandem with a collection of other measures designed to discourage regulatory arbitrage—would enable the CRA to fulfill its promise: to expand access to credit, spur investment in overlooked areas, and combat racial inequities through the financial system.

ALI announces principles project on high-volume, low-stakes civil cases, including debt collection, eviction, foreclosure

From the announcement:

The American Law Institute’s Council voted today to approve the launch of a Principles of the Law project that will address a serious challenge facing state courts: the adjudication of high-volume, high-stakes, low-dollar-value civil claims. The project will be led by Reporter David Freeman Engstrom of Stanford Law School.

These types of claims, which arise in such areas as debt collection, evictions, home foreclosure, and child support, comprise a significant proportion of state court cases. These types of cases raise unique issues as they are frequently uncontested, resulting in high numbers of default judgments, and typically feature at least one party without a lawyer.

* * * 

Engstrom [explained]: “The project will define the issues raised by these claims and attend to the fundamental, and often competing, process values of efficiency, accuracy, and fairness that are implicated in their adjudication. It will articulate principles for procedure and case management, court administration, the use of technology, the supply of and demand for legal help, institutional design, and dispute prevention to help courts and policymakers chart a wise path forward.”

Looks like they are still looking for Associate Reporters, and Advisers to the project

Adam Levitin's American Banker Op-ed: Those seeking to bring down the CFPB should be careful what they wish for

Here. Behind a paywall, but also available on Lexis. Excerpt: 

* * *The Fifth Circuit is claiming the CFPB wields broader regulatory authority than the Fed, a full-fledged bank regulator that engages in rulemaking and enforcement, operates the payment systems that are the backbone of the economy, and regulates monetary policy and employment. This is what is known as "motivated reasoning."   

* * *

Consider a mortgage lender that needs to make disclosures when making a loan. For years that lender has been using the disclosure forms promulgated by the CFPB, knowing that using them shields it from liability. If the agency is unconstitutional, the use of those forms ceases to provide any legal protection.

Likewise, the CFPB's Qualified Mortgage safe harbor from theDodd-Frank Act's ability-to-repay requirement will disappear if the CFPB is unconstitutional, triggering immediate liability on lenders' warranties to investors that the mortgages they sold them were qualified mortgages. Every bank that charges an overdraft fee will suddenly be breaking the law, because overdraft fees are exempted from cost of credit disclosures by virtue of CFPB regulation.

Op-ed: Banks fight for the right to discriminate

by Jeff Sovern

Here, in the NY Daily News. My latest op-ed. Excerpt:

You might not expect that in the year 2022, businesses would go to court asserting a right to discriminate. Yet that is essentially what the Chamber of Commerce and various banking groups did last month when they sued the Consumer Financial Protection Bureau.

The Chamber argues that the CFPB is breaking the law by checking if financial institutions discriminate when they decide whether to allow them to open checking accounts. Under the Chamber’s approach, it appears that the Bureau could not do anything if, for example, a bank told customers that it would not open checking accounts for people of their race.

* * *

At the same time the banking groups argue that they should be free from consequences for discrimination, individual banks proclaim their commitment to diversity. Thus, JPMorgan Chase says it does not tolerate discrimination against customers while Citibank says it will work to “increase representation of people of color on Citi accounts.” The lawsuit undermines these claims.

Fifth Circuit decision creating issues in other CFPB cases

That's the takeaway from Evan Weinberger's Bloomberg Law report, CFPB Funding Decision Is Grist for Agency Enforcement Fights. Excerpt:

At least two companies targeted in CFPB enforcement actions have already pointed to the ruling to ask other courts to dismiss the actions on constitutional grounds. Others will wield the US Court of Appeals for the Fifth Circuit decision in settlement negotiations and battles over civil investigative demands until ruling appeals are exhausted, attorneys who represent companies say.

“Very few companies will settle with the CFPB, except for chump change,” said Alan Kaplinsky, a senior counsel at Ballard Spahr LLP, who represents companies battling the agency.

The CFPB has already signaled that the Fifth Circuit ruling—which isn’t the first such legal threat the agency has faced—won’t slow its efforts. Still, having to grapple with the ruling in enforcement actions will cause delays and stretch the bureau’s resources.

 

Adam Levitin's critique of the Fifth Circuit's CFPB decision

Here. Definitely worth a read.

States lack standing to challenge the Dept of Education's plan to relieve student debt

Yesterday evening, a federal court in Missouri dismissed a challenge by six states (Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina) to the Department of Education's plan to cancel $10,000 (or $20,000 for Pell grant recipients) of federal student-loan debt. The court held that the states lacked standing to bring the case.

The district court opinion is here.

Justice Barrett denies request to block Biden student debt-relief plan

This afternoon, Justice Amy Coney Barrett denied, without comment, a request from a taxpayers’ association in Wisconsin to enjoin the Biden Administration's plan for student debt relief. The lower court had held that the plaintiff lacked standing. The New York Times has the story, here.

Stunning Fifth Circuit decision invalidates CFPB's payday lending rule, holding that the agency is "unconstitutionally structured"

Read the opinion. The court summarized its ruling this way:

Community Financial Services Association of America and Consumer Service Alliance of Texas challenge the validity of the Consumer Financial Protection Bureau’s 2017 Payday Lending Rule. The Plaintiffs contend ... that the Bureau is unconstitutionally structured. [We agree with the Pplaintiffs that] Congress’s decision to abdicate its appropriations power under the Constitution, i.e., to cede its power of the purse to the Bureau, violates the Constitution’s structural separation of powers. We thus reverse the judgment of the district court, render judgment in favor of the Plaintiffs, and vacate the Bureau’s 2017 Payday Lending Rule.

 

CLP blog - emails not working

Subscribers to our daily email digest of blog posts will have noticed that the emails have stopped coming. We have not been able to fix the problem but continue to work on it. Until it is fixed, please visit us here, on the website, to read our latest posts about consumer law and policy.