Consumer Law & Policy Blog

Paul Bland's Testimony on Mandatory Binding Arbitration

Just down the page, Deepak told you about today's congressional hearing on mandatory binding arbitration clauses in take-it-or-leave-it consumer contracts.  Deepak noted that Paul Bland testified on the topic, prompting me to read Paul's testimony.  It's so darn good that I am posting it here.  Read it.

Bankruptcy Credit Counseling Roundtable

by Jeff Sovern

      On June 1, I attended a terrific policy roundtable on the credit counseling required by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, at Fordham Law School, put on by the Fordham Corporate Law Center and Susan Block-Lieb of Fordham.  Because I knew so little about the subject, not being a bankruptcy person, I remained silent, and have been feeling guilty ever since.  That's because there's an unstated expectation at these events that you'll pay back the other contributors from whom you learn by contributing yourself-and I learned quite a bit.  But one of the virtues of a blog is that you can expiate your guilt to some extent by commenting later (blogging as therapy).   Things stated at the roundtable were off the record, but I can report on materials in the public record and my own views, now that I've had some time to figure out what they are.

        The credit counseling industry has existed for some forty years and has had a checkered history.  While some studies have found credit counseling has had beneficial results, see Abdighani Hirad & Peter M. Zorn, A Little Knowledge is a Good Thing: Empirical Evidence of the Effectiveness of Pre-Purchase Homeownership Counseling 2 (2001) ("counseling can be effective in reducing mortgage delinquency . . . . borrowers receiving counseling through individual programs experience a 34 percent reduction in delinquency rates."); Gregory Elliehausen, E. Christopher Lundquist & Michael E. Staten, The Impact of Credit Counseling on Subsequent Borrower Credit Usage and Payment Behavior 31 ("one-on-one credit counseling has a positive impact on borrower behavior over an extended period."), counseling agencies have also been the subject of a many consumer complaints and FTC enforcement actions. 

House Judiciary Hearing on Arbitration This Morning

This morning, starting at 10:30am, the House Judiciary Committee's Subcommitee on Commercial and Administrative Law will hold a hearing entitled Mandatory Binding Arbitration Agreements: Are They Fair for Consumers? This hearing isn't tied to any specific legislative proposals, but it signals the increasing interest in this important issue on Capitol Hill.

The lineup is three pro-consumer witnesses and one corporate defense lawyer: our co-blogger Paul Bland of Public Justice, who has been leading the fight against BMA in the courts; Jordan Fogal, a consumer with an arbitration horror story; David Schwartz, a law professor at the University of Wisconsin, who will be criticizing the Supreme Court's Federal Arbitration Act jurisprudence as inconsistent with the original Congressional intent; and Mark Levin, a partner at the same Philadelphia law firm as mandatory arbitration's architect-in-chief, Alan Kaplinsky.

You can watch a live video webcast of the hearing and read written testimony at this link.

Problems with Private Student Loans

Yesterday's Times had an article "With Few Limits and High Rates, Private Loans Deepen Student-Debt Crisis," that discusses some of the problems caused by the failure to regulate student loans from private lenders.  Among the problems: students seem not to know basic terms of their loans, including the interest rates.  Sounds like an argument for applying Truth-in-Lending to student loans.  Maybe if TILA applied to student loans, it wouldn't matter so much who the preferred lenders are.

Do Consumer Class Actions Have a Future?

The ABA Journal has a column here titled "Decline and Fall" discussing whether consumer class actions have a future.  The piece is by Edward F. Sherman, a professor and former dean at Tulane who also chaired the ABA Task Force on Class Acton Legislation from 2001 to 2003.  The ABA will offer a CLE program on class actions and consumers via teleconference or online later this month.

Some Details on Yesterday's House Hearing on Credit Cards

    As Deepak previously reported, yesterday the Financial Institutions and Consumer Credit Subcommittee of the House Committee on Financial Services held a hearing regarding credit card practices. U.S. PIRG's  consumer blog has this nice report on the hearing, including links to testimony and other information. 

House Committee to Examine Preemption & the Future of Consumer Protection

Rep. Barney Frank (D-MA), Chairman of the House Committee on Financial Services, has announced that the committee will hear from federal and state regulators on the future of federal consumer protection in the financial services sector.  The hearing entitled, Improving Federal Consumer Protection in Financial Services, will take place on Wednesday, June 13, 2007, at 10:00 a.m. in room 2128 of the Rayburn House Office Building.

The hearing will examine consumer protection in the financial services sector in light of regulatory and judicial decisions over the past several years that have preempted state consumer protection laws for federally chartered institutions, and thereby reduced the role of state officials in policymaking, complaint resolution and enforcement.  The hearing will seek ideas for improving consumer protection given these recent changes. The Committee will focus on the adequacy of current federal consumer protection rules (including agencies' use of authority against unfair and deceptive financial trade practices), the effectiveness of existing consumer complaint resolution mechanisms, improvements that may be needed in both of these areas, and the future role of state agencies in protecting financial consumers.

Credit Card Hearing Now Underway

The House Financial Services Commitee's hearing on Improving Credit Card Consumer Protection: Recent Industry and Regulatory Initiatives started half an hour ago.  You can watch it live at this link.  Among a panel packed with industry representatives, there are only two people representing consumer interests:  Kathleen Keest of the Center for Responsible Lending and Ed Mierzwinski of U.S. Pirg.

NHTSA's Safety Recalls for May 2007

The National Highway Traffic Safety Administration has just released its May 2007 vehicle safety recall report.  As previously noted, the CL&P Blog has begun to post monthly recall reports from both NHTSA and the Consumer Product Safety Commission.

Debt Collectors and Answering Machines

by Jeff Sovern

My co-blogger, Deepak Gupta has previously blogged about the FTC's request for comments on debt collection in preparation for a workshop it plans to hold in October.  Today is the deadline for submitting comments,  though the Commission is willing to receive original research, surveys, and academic papers until September 7.  I submitted a comment earlier today (the number assigned my submission suggests only fifteen had been received to that point, though perhaps many last-minute statements have since been or will be filed).  The FTC will make the comments available on its website and in fact seven statements received in April and May have already been posted there.  The following excerpt from my comment deals with debt collectors who, when attempting to telephone a consumer, instead reach an answering machine: 

The FDCPA was enacted in 1977, when telephone answering machines were not yet common, and so the drafters of the statute understandably did not anticipate all the consequences of that technology.  In the intervening decades, answering machines and voice mail have, of course, become omnipresent.  Answering machines present a dilemma for debt collectors.  Debt collectors who repeatedly reach an answering machine and respond by hanging up without leaving a message risk violating § 806, 15 U.S.C. § 1692d, barring harassment, and particularly subsection (5) of that provision (“Causing a telephone to ring . . . repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.”) and subsection (6) (prohibiting “the placement of telephone calls without meaningful disclosure of the caller’s identity”).