Industry Lawyer Fact Checks John Oliver on Robocalls

Earlier this week, we posted a link to a John Oliver segment on robocalls.  Eric J. Troutman fact checks Oliver here. Excerpt:

Assertion 5: Robocall Volume Exploded After A Court Decision Overturned the FCC’s Rules Expanding the TCPA

TCPAworld. com Accuracy Score: Liar liar pants on fire

This was the worst part of the bit.

Oliver states that robocalls exploded after ACA Int’l set aside the FCC’s expansion of the TCPA last year. He even throws up a blurry little graph to prove it. * * *

But wait a second. Take a close look at that graph.

What you’ll see is that robocalls actually exploded AFTER the 2015 Omnibus Ruling expanding the TCPA and BEFORE the court set aside those rulings. 

* * *

Lobbyists scuttle consumer product safety rules

The online journal FairWarning this week reported on how lobbyists from the law firm Bracewell LLP have "specialized in helping product makers thwart rulemaking by the Consumer Product Safety Commission."

One after another, industries have turned to Bracewell to fight unwanted federal standards, and they have not been disappointed. Along with the [recreational off-highway vehicle] rule, Bracewell and its clients in recent years have sidelined mandatory standards aimed at keeping toddlers from being strangled by window blind cords; avoiding carbon monoxide poisoning deaths from portable generators; and preventing thousands of finger amputations by table saws.

The article is here.

Anne Fleming: Consumer rights are worthless without enforcement

In The Conversation. Excerpt:

Compared with 1962, when President Kennedy put consumer concerns on the national agenda, ordinary Americans now have far more robust rights to safety, to information, to choice and to a fair hearing.

But consumer rights do not enforce themselves. Public enforcement requires funding and willing leaders. Private enforcement requires legal devices that allow consumers to pay attorneys for their work.

Without an ongoing commitment to enforcement, consumer rights may become paper tigers, offering the appearance of protection without any teeth.

“Dormant: The Consumer Financial Protection Bureau’s Law Enforcement Program in Decline”

That’s the title of a new report from Chris Peterson at the Consumer Federation of America. According to the executive summary:

This study analyzes whether the CFPB, under the Trump Administration, is delivering on its statutory law enforcement objectives and stated commitments to take aggressive action in the area of consumer law enforcement, particularly where complaint volume is the largest. To accomplish this, this study identifies and classifies every public enforcement action since the inception of the CFPB through the first three months of Director Kathleen Kraninger’s term in office.

Overall, this study finds that under the leadership of Acting Director Mick Mulvaney, and more recently, Director Kathy Kraninger, enforcement activity at the CFPB has declined to levels that are either nonexistent or significantly below that of the prior Administration, even in the areas where consumer complaint activity is the highest. The Bureau has announced only two cases each under authorities specifically given to the Bureau to address issues with credit reporting and mortgage lending, one case related to debt collection, and no cases related to student lending. Troublingly, the Bureau has also failed to announce or resolve a single antidiscrimination case.

Further, in addition to a decline in the overall volume of enforcement actions, this study shows significantly less monetary relief going to consumers. The CFPB returned about $43 million in restitution to consumers for each week of the Bureau’s first Director’s term in office. In the relatively few cases resolved since, this amount has plummeted to about $6.4 million per week under Acting Director Mulvaney and most recently dropped again to about $925,000 per week under Director Kraninger. The Bureau has not announced a single dollar of monetary relief in any of the high-volume complaint areas of credit reporting, debt collection, or student lending.

Overall, enforcement activity and relief to the consumer has declined since the appointment of Mick Mulvaney in 2017. And, despite being touted as one of Director Kraninger’s initial priorities for her term of leadership, law enforcement activity continues to remain significantly below earlier levels since her confirmation.

The full report is available here.

Bradley Paper: The Consumer Protection Ecosystem

Christopher G. Bradley of Kentucky has written The Consumer Protection Ecosystem: Law, Norms, and Technology. Here is the abstract:

Consumer law provokes fierce policy debate on issues from identity theft to online privacy, from arbitration clauses and class action lawsuits to Americans’ accumulation of debt and the unsavory practices sometimes used to collect. Pervasive technology in every aspect of consumer transacting has opened up many new fronts in these battles. Scholars, policymakers, and advocates have responded in kind, devoting increased energy to this area of law, which affects every single one of us, every single day. Despite its prominence, however, confusion persists regarding what consumer protection really is or does. The realities of social and technological change have not been integrated into legal analyses of consumer transactions. 

This Article constructs a novel and comprehensive model of the consumer protection ecosystem by contextualizing purely legal constraints amid the other realities of commercial relationships. Drawing on scholarship in the areas of technology, social change, and the law, the model lays out three basic types of constraints on the activities of participants in consumer commercial transactions: legal, technical, and social constraints. This model provides a basis for exploring how those constraints interact and shape behavior.

The model has significant ramifications for scholars, policymakers, and advocates. The model underscores why the area of consumer-facing commerce defies one-size-fits-all solutions; instead, it demands refined and layered consideration of consumers, merchants, and the commercial relationships they pursue, as well as the changes in the social and technological contexts of those relationships. This Article’s model provides a framework for that future research and debate.

 

John Oliver Takes on Robocalls

Or click here.

Blaming the victim for "misusing" dangerous products

Consumer Product Safety Commission commissioner Robert Adler and law prof Andrew Popper have written The Misuse of Product Misuse: Victim Blaming at Its Worst. Here is the abstract:

This paper addresses the legal consequences that surface when a consumer uses a product in a manner not specifically intended by that product's designer or manufacturer. If a product is used in a reasonably foreseeable manner, the fact that the use is at odds with a manufacturer’s intention should not be a basis to deny tort liability or limit the regulatory options of the Consumer Product Safety Commission. If a product proves to be unsafe, defective, dangerous, or otherwise hazardous to users and consumers, use patterns should not be the primary determinant in assessing regulatory and common law sanctions or consequences. While producers may wish to limit tort liability or regulatory impact by characterizing as wrongful all uses not fully consistent with specified instructions, limiting tort liability or regulatory impact is indefensible, inhumane, and at odds with common law tort principles and the clear purposes of the Consumer Product Safety Act. Penalizing consumers for uses that are reasonable but not expressly intended is little more than victim blaming. A legal culture that scapegoats consumers is justly seen as pathological regulatory capture. Ramped up consumer misuse standards reward those who create risks and punish those who are harmed. That cannot possibly be the goal of the common law or the legacy anticipated when the Consumer Product Safety Commission was formed nearly a half-century ago.

CFPB director appears at House oversight hearing

In the first Consumer Financial Protection Bureau oversight hearing of 2019, "Democrats repeatedly hammered Director Kathy Kraninger and GOP lawmakers for supporting recent changes at the agency." Rollcall has the story, here.

How the New US News Scholarly Impact Ranking Could Hurt Niche Subjects, Like Consumer Law

by Jeff Sovern

There's been a lot of talk among law professors about the US News plan to measure faculty scholarly impact in part by citations to faculty scholarship (see here for a blog post citing to commentary).  While for now US News says it will not incorporate the citation rankings into its general law school rankings, US News may in the future replace the faculty reputation measure to some extent with a measure of how frequently professors are cited.  That could create disturbing incentives for faculty hiring and retention, as well as affect what professors write about. 

To be more concrete, imagine that a law school is hiring a new professor and has two candidates.  One candidate writes about criminal law and the other writes about consumer law.  The law school wants to maximize its ranking, and so wants to hire the candidate whose work will be cited more.  The universe of people writing scholarly articles about criminal law is much larger than the universe of professors writing about consumer law, and so, all other things being equal, the criminal law professor is likely to rack up more citations and so help with the school's ranking more.  How do we know more people write about criminal law?  I did a search for "consumer law" on SSRN and got 637 hits. "Criminal law" by contrast elicited 7,867 hits, or more than a dozen times as many. Every law school offers criminal law courses, probably all have a full-time professor teaching in the area, and many have one or more professors writing in the area. But as of 2014, only about a third of law schools had a consumer law course of one sort or another (yes, I need to update that), and many of the courses were taught by adjuncts who have a day job and so are unlikely to find time to write about consumer law.  Fewer professors writing in an area means fewer people likely to cite your work. And so that means hiring the consumer law scholar could hurt your ranking as compared to hiring the criminal law professor. It also means that those seeking to become law professors should write in widely-taught areas to make themselves more attractive to law schools.

Now maybe you're thinking that even within broad areas like criminal law, professors are apt to specialize when it comes to writing and so as a practical matter writing about a consumer law topic is no different than writing about a criminal law topic. So let's compare the number of papers on SRRN in a couple of specific areas within criminal law and consumer law.  Homicide drew 767 hits while "mens rea" got 479 hits. "Debt collection" elicited 179 hits while "credit reporting" got 135.  Those differences are less dramatic, but the number of criminal law hits are still multiples of the consumer law hits. No doubt SSRN is an imperfect measure of the amount of scholarship in a particular area, but it would have to be off by a lot to make those differences insignificant. It makes intuitive sense that a subject that is taught at fewer law schools will be written about less--and so generate fewer citations. 

This isn't just bad for consumer law scholars. It's also bad for consumer law, and indeed any subject that isn't taught at all or nearly all law schools.  If you think, as I do, that scholarship is valuable, and law schools stop producing consumer law scholarship because they stop hiring consumer law professors, then society will have lost something. Society will have gained instead more articles about widely-taught subjects, but surely the marginal value of yet another article on criminal law is less than the marginal value of an article in an area less traveled.

 

Robocalls, the TCPA, and Professional Plaintiffs

by Jeff Sovern

The next edition of our casebook will have a lot more about robocalls.  According to a letter from the attorneys general of all 50 states dated yesterday, robocalls and telemarketing calls are the top source of consumer complaints at many AG's offices.  The Telephone Consumer Protection Act, which outlaws some robocalls, also offers some interesting lessons about consumer lawmaking.  The TCPA provides for statutory damages of $500 for each call, and even that can be tripled for willful and knowing violations. That brings us to Stoops v. Wells Fargo Bank, 197 F. Supp. 3d 782 (W.D. Pa. 2016).  Stoops had purchased at least 35 cell phones. She carried the phones about with her, waiting for them to ring with illegal calls. She had filed at least 11 TCPA cases and sent at least twenty pre-litigation demand letters. Two of plaintiff’s numbers had previously been assigned to customers of Wells who had defaulted on loans and consented to receiving Wells auto-dialed and recorded calls. After Wells made numerous such calls to the numbers, plaintiff sued Wells under the TCPA.  Plaintiff testified that she was bringing the lawsuits as a business. The court granted summary judgment for defendant on the ground that plaintiff had not suffered an actual injury and therefore lacked standing.

There is something quite distasteful about professional plaintiffs like Ms. Stoops. It's hard not to cheer at her getting her comeuppance. Stoops stooped to conquer (sorry). On the other hand, would the same conduct have been objectionable if the FCC or a state AG had engaged in it?  Law enforcement agencies routinely engage in stings. Consumers are given the right to bring claims under consumer protection statutes like the TCPA because we need more enforcement of the law than the government can supply. Such plaintiffs are even said to serve as private attorneys general. So didn't she do exactly what the law contemplates? Did she lose because of her honesty in testifying that she was suing under the TCPA as a business?  What else should we say in the casebook or the associated teacher's manual about this? Does her behavior leave a bad taste in your mouth?

 

FDA Commissioner Scott Gottlieb is quitting after about 2 years on the job

Here is the opening of the New York Times article on Gottlieb's resignation:

Scott Gottlieb, the commissioner of the Food and Drug Administration, known for his aggressive efforts to regulate the tobacco and e-cigarette industries, said on Tuesday that he would resign at the end of the month.The reason he gave was family and his weariness with commuting to see his wife and three children, who have remained in their Westport, Conn. home since he took office. But his announcement caught many in Washington and the industries he regulates by surprise and raised questions about whether his push to reduce teenage vaping and lower nicotine levels and ban menthol in cigarettes will continue in an administration that generally has a hands-off approach to business.

For other articles on the surprise resignation, go here, here, here (concerning Gottlieb's "legacy"), and here.

Story on employer helping students pay off student loans

This article by Stuart Singer discussed how one company has a program to help students pay off their student loans. According to the Federal Reserve, outstanding student-loan debt was $1.57 trillion in 2018, more than triple the $487 billion in 2006.

The Centers for Disease Control is investigating the dangers of electric scooters

Electric scooters have simply showed up on the streets, placed there by profit-seeking companies, largely or entirely unregulated. Read this story by Sharon Jayson concerning an investigation into the large number of injuries caused by e-scooters currently underway at the Centers for Disease Control. 

Proving up torts involving self-driving cars via inference

Bryan Casey has written Robot Ipsa Loquitur. Here is the abstract:

Accidents are becoming automated. From self-driving cars to self-flying drones, robots are increasingly colliding with the world. And one of the most pressing questions raised by these technologies — indeed, one of the great regulatory challenges of the coming era — is how the law should account for crashes involving such complex automated systems. By now, many have weighed in, including the field’s luminaries. And, though responses vary, a tentative consensus has emerged on at least one front. Age-old negligence liability is essentially a nonstarter. For negligence requires a showing of fault. And in a world where vexingly complex robots roam, how could one possibly find the needle of negligence in a haystack comprised of millions of lines of computer code?

This Article challenges that view. In sharp contrast to the prevailing wisdom, it argues that widespread debates over the so-called ‘vexing tort problems’ raised by modern robots have overlooked a crucial issue: inference. Negligence, after all, needn’t be shown by pointing directly to a faulty line of code. Like all facts, it can be proven indirectly through circumstantial evidence. Indeed, as the ancient negligence rule of res ipsa loquitur makes plain, sometimes an accident can “speak for itself.”

Using the first robot accused of negligence as a case study, this Article shows how advanced telematics technologies in modern machines provide richly detailed records of accidents that, themselves, speak to the negligence of the parties involved. In doing so, it offers the first wide ranging account of how inference-based analysis can — and, in fact, already does — elegantly resolve liability determinations for otherwise confoundingly complex accidents. After showing that the purportedly novel challenges posed by robots are neither unprecedented, unresolvable, nor even unique to emerging technologies, the Article then takes a more practical turn. Drawing from a rich vein of precedent involving automated accidents, it outlines steps that courts, practitioners, and policymakers can take to streamline fault determinations using an approach it calls robot ipsa loquitur. With trillion-dollar markets and millions of lives on the line, it argues that drastic calls by leading experts to upend conventional liability are ahistorical, contrary to tort law’s fundamental goals, and unnecessary to protect the interests of accident victims. A simpler, more productive approach would let the robot speak for itself.

States at the forefront of consumer privacy legislation

The American Banker reports on state efforts to pass consumer privacy laws, including laws passed others under consideration. The article is here.

Get the Consumer Product Safety Commission's recall app

The Consumer Product Safety Commission has created a recall app for your mobile phone allowing easy tracking of federal consumer product safety recalls. Get the app here. 

Credit bureau reform

Last week, the National Consumer Law Center's Chi Chi Wu testified before the House Financial Services Committee on continuing serious problems plaguing the credit reporting industry, including its failure to ensure the accuracy of credit reports. Among other things, the testimony identified these concerns:

• unacceptable error rates and the myriad types of systemic inaccuracies in credit reports;
• the travesty of the automated dispute system used by the credit bureaus;
• the absurdity that credit reports and scores treat consumers who have fallen on hard times as irresponsible deadbeats;
• systemic racial disparities in credit scoring;
• the unfair impact of medical debt on credit reports;
• the problems with use of credit reports for employment purposes, and
• the deficiencies in data security that led to the massive Equifax data breach, which has not yet been adequately addressed.

NCLC called on Congress and regulators to institute these reforms:

• a right of appeals for consumers when they disagree with a furnisher or credit bureau about the results of a dispute investigation;
• stricter matching criteria to ensure that information belonging to one consumer does not get wrongfully mixed into the credit report of another consumer;
• a requirement that credit bureaus devote sufficient resources to the dispute system and a clarification that they must conduct independent analyses instead of simply parroting what furnishers tell them;
• a right to seek court orders to compel credit bureaus to fix reports;
• more control for consumers by requiring that they must proactively authorize the use of their credit reports for credit, insurance and other uses, and
• a publicly-owned alternative to the credit bureaus.

Read NCLC's press release on the testimony, the testimony itself, and NCLC's comprehensive report on the topic entitled Automated Injustice Redux.

 

Inside the payday-loan industry's efforts to ditch the CFPB's payday lending rules

Read this article by Renae Merle entitled How a payday lending industry insider tilted academic research in its favor. It explains how payday-loan industry lobbyists bought (and sometimes wrote) research from supposedly independent academics purporting to show that payday loans don't harm consumers.

Oh, and by the way, the payday-loan industry's lobby group "held its 2018 meeting at the Trump National Doral Golf Club near Miami and plans to meet there again this year."

Financial institutions report widespread elder financial abuse

The CFPB has released a report on financial exploitation of the elderly by people ranging from offshore scammers to family members. The report compiles information from Suspicious Activity Reports submitted by banks, credit unions, casinos, and other financial services providers. The 180,000 elder financial exploitation SARs reviewed for the report were submitted from 2013 to 2017 and involving more than $6 billion. 

The report is here.

FTC case challenges fake paid reviews on Amazon

The Federal Trade Commission announced its first case challenging a marketer’s use of fake paid reviews on an independent retail website. In a settlement announced at the same time, Cure Encapsulations and its owner resolved allegations that they made false and unsubstantiated claims for their garcinia cambogia weight-loss supplement and that they paid a third-party website to write and post fake reviews on Amazon.com, to create and maintain a a high rating.

The FTC's press release, with links to the complaint and proposed settlement, is here.

Supreme Court grants review in Fair Debt Collection Practices Act statute-of-limitations case

The Supreme Court has granted review in Rotkiskie v. Klemm. The question presented in the 8-page (!) petition for a writ of certiorari is

whether the “discovery rule” applies to toll the one (1) year statute of limitations under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692, et seq., as the Fourth and Ninth Circuits have held but the Third Circuit (sua sponte en banc) has held contrarily.

So, put somewhat differently, the question is whether the statute of limitations invariably begins to run on the date that the FDCPA violation occurs or, rather, the "discovery rule" applies in FDCPA cases (in some or all circumstances). The discovery rule provides that a limitations period begins to run "when the plaintiff knows or has reason to know of the injury which is the basis of the action."  Magnum v. Action Collection Serv. Inc., 575 F.3d 935, 940 (9th Cir. 2009) (applying discovery rule in FDCPA suit).

The FDCPA's statute of limitations says that “[a]n action to enforce any liability created by this subchapter may be brought in any appropriate United States district court . . . within one year from the date on which the violation occurs.” 15 U.S.C. § 1692k(d). 

Hayashi Paper: Consumer Law Myopia

Andrew T. Hayashi of Virginia has written Consumer Law Myopia. Here is the abstract:

People make mistakes with debt, partly because the chance to buy now and pay later tempts them to do things that are not in their long-term interest. Lenders sell credit products that exploit this vulnerability. In this Article, I argue that critiques of these products, particularly those that draw insights from behavioral law and economics, have a blind spot: they ignore what the borrowed funds are used for. By evaluating financing transactions in isolation from the underlying purchase, the cost-benefit analysis of consumer financial regulation is truncated and misleading. I show that the same bias that causes someone to take an exploitative loan may also imply that the loan benefits them by causing them to purchase a product or service that they should, but wouldn’t otherwise, buy. I demonstrate the importance of this effect in a study of tax refund anticipation loans. I find that regulation curtailing these loans reduced the use of paid tax preparers and the takeup of the earned income tax credit, which is the second largest federal transfer to low-income households.

A Way for Consumer Agencies to Generate Thought on Issues of Interest

by Jeff Sovern

A post inspired by a question I heard Kathleen Engel ask: every year second-year students ask professors for suggestions for topics to write about for law reviews. Law professors and other lawyers also cast about for article topics.  Meanwhile, administrative agencies often confront questions about what the law is or how it should develop, questions that might benefit from some thought from outsiders. It might serve all these groups--as well as the public and the development of the law--if the CFPB, FTC, and other agencies posted on their web sites a list of possible topics about which law students, law professors, and other lawyers could fruitfully write about. The ANPR process already entails something similar, but this is somewhat different in that it isn't limited to rule-making and could simply be a list which is revised from time to time.

2018 FTC annual report on refunds to consumers

According to a report issued by the Federal Trade Commission last week, between July 1, 2017 and June 30, 2018, the agency’s law enforcement actions yielded more than $2.3 billion in refunds to defrauded consumers, including $122 million mailed directly by the FTC to 2.2 million people.

The report is here.

"Google reaped millions in tax breaks as it secretly expanded its real estate footprint across the U.S."

That's the name of this story by Elizabeth Dwoskin. Here's an excerpt:

Last May, officials in Midlothian, Texas, a city near Dallas, approved more than $10 million in tax breaks for a huge, mysterious new development across from a shuttered Toys R Us warehouse. ... The developer, which incorporated with the state four months earlier, went by the name Sharka. City officials declined at the time to say who was behind Sharka. The mystery company was Google — a fact the city revealed two months later, after the project was formally approved. Larry Barnett, president of Midlothian Economic Development, one of the agencies that negotiated the data center deal, said he knew at the time the tech giant was the one seeking a decade of tax giveaways for the project, but he was prohibited from disclosing it because the company had demanded secrecy. “I'm confident that had the community known this project was under the direction of Google, people would have spoken out, but we were never given the chance to speak,” said Travis Smith, managing editor of the Waxahachie Daily Light, the local paper. “We didn't know that it was Google until after it passed.” After the deal went through, Sharka changed its main address to that of Google's headquarters in Mountain View, Calif. Site work began last fall.