Consumer Law & Policy Blog

Coordinators

  • Allison Zieve
    Public Citizen Litigation Group
  • Jeff Sovern
    St. John's University School of Law
  • Brian Wolfman
    Georgetown University Law Center and Harvard Law School

Other Contributors

  • Richard Alderman
    University of Houston Law Center
  • Paul Bland
    Public Justice
  • Stephen Gardner
    Consultant
  • Mike Landis
    US Public Interest Research Group
  • Paul Alan Levy
    Public Citizen Litigation Group
  • Scott Nelson
    Public Citizen Litigation Group
  • Ira Rheingold
    National Association of Consumer Advocates
  • Jon Sheldon
    National Consumer Law Center

About Us

www.clpblog.org

The contributors to the Consumer Law & Policy blog are lawyers and law professors who practice, teach, or write about consumer law and policy. The blog is hosted by Public Citizen Litigation Group, but the views expressed here are solely those of the individual contributors (and don't necessarily reflect the views of institutions with which they are affiliated). To view the blog's policies, please click here.

Blogs On Consumer Issues

  • Alabama Consumer Law Blog
  • Arnold & Porter Consumer Advertising Law Blog
  • CAFA Law Blog
  • Caveat Emptor
  • Citizen Vox
  • Consumer Affairs with Sheryl Harris
  • THE CONSUMERIST
  • Credit Slips
  • Home Equity Theft Reporter
  • Fair Arbitration NOW Blog
  • UCL Practitioner
  • U.S. PIRG Consumer Blog

Other Interesting Legal Blogs

  • American Constitution Society Blog
  • Balkinization
  • Concurring Opinions
  • The Conglomerate
  • Electronic Frontier Foundation DeepLinks
  • Empirical Legal Studies
  • How Appealing
  • Legal Theory Blog
  • Mass Tort Litigation Blog
  • Opinio Juris
  • PrawfsBlawg
  • Rebecca Tushnet's 43(B)log
  • SCOTUSblog
  • TortsProf Blog
  • Trademark Blog
  • Truth on the Market
  • The Volokh Conspiracy

Consumer Law & Policy Links

  • AAAP Foundation Litigation
  • American Collectors' Association
  • Americans for Financial Reform
  • American Tort Reform Association
  • American Association of Justice
  • Center for American Progress
  • Center for Justice and Democracy
  • Center for Responsible Lending
  • Center for Science in the Public Interest
  • Center for Study of Responsive Law
  • Consumer Action
  • Consumer Federation of America
  • Consumers Union
  • Electronic Frontier Foundation
  • Electronic Privacy Information Center
  • EU Consumer Policy Page
  • Fair Arbitration NOW
  • Federal Trade Commission
  • International Association of Consumer Law
  • National Association of Consumer Advocates
  • National Association of Consumer Bankruptcy Attorneys
  • National Community Reinvestment Coalition
  • National Consumer Law Center
  • Public Citizen
  • State PIRGs
  • Public Justice (formerly Trial Lawyers for Public Justice)
  • Treasury Department, Regulatory Reform Agenda
  • U.S. Chamber Legal Reform
  • U.S. Public Interest Research Group

« February 2009 | Main | April 2009 »

Tuesday, March 31, 2009

Senate Banking Committee Passes Credit Card Bill

Here's the Committee's Statement:

Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, announced today that the Committee passed comprehensive legislation he authored to protect consumers from confusing, misleading and predatory practices by credit card companies.  Having fought to reform the credit card industry for over two decades, Dodd wrote the Credit Card Accountability, Responsibility and Disclosure Act, a version of which he introduced in 2004, to provide tough new protections for consumers who are treated unfairly by their credit card companies, some of whom are encountering financial ruin as a result.
 
“Millions of Americans are being laid off, our economy is in crisis, and the need to modernize our financial system is clear.  With this perfect storm of challenges, this is the moment to stand up for consumers in every corner of America who are struggling through this recession,” said Dodd.  “Economic recovery will only come when we put an end to the abusive practices that continue to drive so many Americans deeper and deeper into debt.  It is the right thing to do for our families, and the right thing to do for our economy. Seizing that moment starts today - and it starts with reforming credit card practices.  I commend the Banking Committee for passing this legislation, and am determined to see this bill pass the United States Senate and become law.”

The Credit CARD Act will help protect American consumers by bringing an end to wrongful credit card practices.  Among other provisions, the legislation will:
 
  • Protect consumers from “any time, any reason” interest rate increases and account changes;
  • Prohibit unfair application of card payments;
  • Protect cardholders who pay on time;
  • Limit abusive fees and penalties;
  • Prohibit issuers from using a consumer’s card history with another creditor to raise interest rates (“universal default” ban);
  • Prohibit issuers from charging interest on debt that has already been repaid;
  • Ensure that cardholders are informed of the terms of their account; and
  • Protect young consumers from aggressive credit card solicitations.

Posted by Jeff Sovern on Tuesday, March 31, 2009 at 04:49 PM in Other Debt and Credit Issues | Permalink | Comments (1) | TrackBack (0)

Monday, March 30, 2009

Ethics in Consumer Law: Reverse Logrolling

Ron Burdge, an excellent consumer lawyer in Ohio, recently posted a blog piece about the ethical issue of what to do when defense counsel tries to get you to agree (usually unethically) to lay off his weasel client in the future. It's a good piece, but I have to say that, since he mostly used an article I'd written on the issue. Ron's blog entry is here if you want to check it out.

You should also take a gander at the other posts Ron has put out, prior to this one. They are uniformly thoughtful and fine--pretty much like Ron himself.

And now I can tell Public Citizen that I've fulfilled my quota of posts to this blog for March (okay, okay, March of 2007, but I'm working on it).

Posted by Steve Gardner on Monday, March 30, 2009 at 02:14 PM | Permalink | Comments (0) | TrackBack (0)

Saturday, March 28, 2009

Paper on Predatory Mortgage Lending

Philip Bond, David K. Musto, and Bilge Yilmaz, all of Penn's Finance Department, have written Predatory Mortgage Lending.  Here's the abstract: 

Regulators express growing concern over predatory loans, which the authors take to mean loans that borrowers should decline. Using a model of consumer credit in which such lending is possible, they identify the circumstances in which it arises both with and without competition. The authors find that predatory lending is associated with highly collateralized loans, inefficient refinancing of subprime loans, lending without due regard to ability to pay, prepayment penalties, balloon payments, and poorly informed borrowers. Under most circumstances competition among lenders attenuates predatory lending. They use their model to analyze the effects of legislative interventions.

Posted by Jeff Sovern on Saturday, March 28, 2009 at 11:12 PM in Consumer Law Scholarship, Predatory Lending | Permalink | Comments (2) | TrackBack (0)

Friday, March 27, 2009

Amy Schmitz on Consumer Warranty Arbitration

Amy Schmitz of Colorado has written Curing Consumer Warranty Woes Through Regulated Arbitration, 23 Ohio State Journal of Dispute Resolution.  Here's the abstract: 

This article proposes legislative procedural reforms accounting for the realities of consumer arbitration that have threatened and denied consumers' access to remedies for companies' violations of public, or statutory, warranty remedies under the Magnuson-Moss Warranty Act (MMWA). Furthermore, the Article proposes to clarify and expand the MMWA's current dispute resolution template in order to resolve judicial disagreement regarding the template's application and foster beneficial use of finding arbitration. Accordingly, this is not a call to ban all pre-dispute arbitration clauses in consumer contracts, but is instead an invitation for more politically palatable reforms that preserve both companies' savings and consumers' access to warranty remedies through arbitration. The time is ripe for legislative reforms that account for the importance of procedural justice and temper contractors' and courts' deference to consumer form contracts.

Posted by Jeff Sovern on Friday, March 27, 2009 at 09:30 PM in Arbitration, Consumer Law Scholarship | Permalink | Comments (2) | TrackBack (0)

Thursday, March 26, 2009

Website Collects Medical Data and Uses That Data for Drug Company Solicitations

by Jeff Sovern

Today's Times includes Online Age Quiz is a Window for Drug Makers, about a web site, RealAge, which tells you your "biological age" if you answer some 150 questions and offers suggestions for reducing that age.  Sounds great. But, the article explains, the information collected is then used to identify patients who might be candidates for medications, and the company sends these patients emails sponsored by drug companies that sell the medications.  Some excerpts:

“Our primary product is an e-mail newsletter series focused on the undiagnosed at-risk patient, so we know the risk factors if someone is prehypertensive, or for osteoarthritis,” said Andy Mikulak, the vice president for marketing at RealAge. “At the end of the day, if you want to reach males over 60 that are high blood pressure sufferers in northwest Buffalo with under $50,000 household income that also have a high risk of diabetes, you could,” he said.

RealAge’s privacy policy does not specifically address the firm’s relationship with drug companies, but does state, in part, “we will share your personal data with third parties to fulfill the services that you have asked us to provide to you,” and it adds test results to its database only when respondents become RealAge members. Some critics, however, charge that consumers do not have enough information when they join.

“Literally millions of people have unknowingly signed up,” said Peter Lurie, the deputy director of the Health Research Group at Public Citizen, a public interest group in Washington. The company, he said, “can create a group of people, and hit them up and create anxiety even though the person does not have a diagnosis.”

The article explains that the company does not provide the drug companies personally identifiable information.  But this business model strikes me as meriting FTC review.  I don't think the privacy policy is clear enough about what the company is doing with the information, especially given the sensitivity of medical information.  See Weld v. CVS Pharmacy, Inc., 1999 WL 494114 (Mass. Super. Ct. 1999) (noting that consumers "arguably possess a greater expectation of privacy as to the use of their names in connection with their prescriptions and medical information . . . ."). And then there's the widely-held suspicion that few consumers even read privacy policies, and many misinterpret them.  For example, one survey found that 75% of American adult users of the internet believe that the fact that a web site has a privacy policy means that the site won't reveal their information to others.  See Joseph Turow, Lauren Feldman, and Kimberly Meltzer, Open to Exploitation: American Shoppers Online and Offline 3 (2005).  If you can give RealAge your information without actually reading their privacy policy, as is common on web sites, which usually permit you to read the privacy policy only if you click on it, RealAge can probably tell how many of its members actually go to its privacy policy page, and if it's not very many, and the company knows that, it raises questions about whether this conduct is unfair within the meaning of the FTC Act.  On top of that, their privacy policy goes on forever, raising questions about how many people who set out to read it make it through the whole thing.  RealAge also reserves the right to change its privacy policy.  My own opinion is that before seeking private medical information, the company should make clear even to those who don't click on the privacy policy what it will do with that information.  But then, I've taken the view, which thus far the FTC has not embraced, that collecting and selling consumer information without the consumer's knowledge or consent violates the FTC Act and UDAP statutes.  See Jeff Sovern, Protecting Privacy with Deceptive Trade Practices Legislation, 69 Fordham L. Rev. 1305 (2001).  

Posted by Jeff Sovern on Thursday, March 26, 2009 at 04:19 PM in Internet Issues, Privacy | Permalink | Comments (4) | TrackBack (0)

Wednesday, March 25, 2009

Does the Subprime Crisis Rebut Claims of Lending Discrimination?

by Jeff Sovern

Redlining The extent of discrimination in lending has long been a hotly-debated subject.  The famous Boston Fed Study, publicized in 1992 and later published as Alica H. Munnell, Geoffrey M.B. Tootell, Lynn E. Browne & James McEneaney, Mortgage Lending in Boston: Interpreting HMDA Data, 86 American Econ. Rev. 25, 26 (1996), reported that "white applicants with the same property and personal characteristics as minorities would have experienced a rejection rate of 20 percent rather than the minority rate of 28 percent."  That study led to considerable discussion: Some argued that the study was flawed and that in fact discrimination does not occur, while others claimed that discrimination occurred.  A book-length study of the issue and points raised by many of the commentators is Stephen Ross & Ross Yinger, The Color of Credit (2002). 

That brings us to subprime lending. Studies have found that subprime borrowers are more likely to be people of color, female, elderly, low-income, or some combination of the foregoing. So if lending discrimination was occuring, we might expect to see less subprime lending.  For many years, of course, subprime borrowers did find it more difficult to obtain loans, but starting in the nineties, subprime lending took off, with the results that we all know about.

In his book Economic Facts and Fallacies, Thomas Sowell suggests that the enormous amount of money lost on subprime loans implies that people of color were not in fact discriminated against by lenders.  The argument (I'm putting it in my own words here and updating it a bit because the book was published in December 2007, before the subprime criss fully unfolded) goes like this: If lenders had discriminated against borrowers of color, they would have charged higher rates than the risk of lending justified.  But because they charged rates that were lower than the risks justified, they lost money on those loans, and in fact many subprime lenders went out of business.  Accordingly, they could not have been discriminating against minority borrowers.

This is an interesting argument, and it may prove to be borne out by the facts. But I think we need to know more to know whether it is correct.  Obviously lenders underestimated the risks of lending, but a big risk that lenders underestimated was the risk that housing prices would fall, thereby preventing borrowers from refinancing, That has nothing to do with race.  Indeed, it may turn out that some subprime borrowers defaulted because of high interest rates and unaffordable monthly payments, which could be the product of charging higher rates to people of color, say, than the borrowers might have qualified for.  Or borrowers could have defaulted because of their inability to refinance, even though lenders would have charged them lower rates all along had they been white.  I'm not saying that happened; all I'm saying is that lenders could have underestimated the risks of lending while still engaging in discrimination.  I'm afraid that the foreclosure fiasco has not put an end to arguments about whether lending discrimination occurs but rather only added more to argue about.

Posted by Jeff Sovern on Wednesday, March 25, 2009 at 02:26 PM in Credit Reporting & Discrimination | Permalink | Comments (4) | TrackBack (0)

Tuesday, March 24, 2009

New FTC Chair Testifies Before House on Consumer Credit Issues

by Deepak Gupta 

Liebowitz The House Committee on Energy and Commerce, Subcommitee on Commerce, Trade, and Consumer Protection is holding a hearing this morning on "Consumer Credit and Debt: The Role of the Federal Trade Commission in Protecting the Public." Among other things, the hearing is exploring an issue I noted earlier this month: Whether the FTC's authority is too constrained to make it effective in fighting increasingly sophisticated and constantly evolving unfair and deceptive practices in the marketplace. Public Citizen's statement to the subcommittee discusses the agency's history of consumer credit regulation, existing authority for future regulation, and our proposed changes to FTC's authority. The witnesses include Jon Leibowitz, the new FTC chairman, James Tierney, Director of the National State Attorneys General Program at Columbia Law School, co-bloggers Christopher Peterson (Utah Law) and Ira Rheingold (NACA), and Republican witness Bill Himpler, a lobbyist for the American Financial Services Association. You can watch the FTC chairman, who is testifying now, on CSPAN.

Update: The Huffington Post has a recap of the hearing here.

Posted by Public Citizen Litigation Group on Tuesday, March 24, 2009 at 11:17 AM | Permalink | Comments (0) | TrackBack (0)

Monday, March 23, 2009

FDIC Chair Speaks Out Against Federal Preemption of Consumer Laws

by Deepak Gupta

 BairFDIC chairman Sheila Bair says that, to protect consumers from aggressive lending practices, Congress should consider "curtailing" the powers of federal banking regulators to preempt state consumer protection laws.  In testimony submitted to the Senate Banking Committee last week, Bair said federal preemption had previously been seen as a way to improve efficiencies for federally chartered banks and lower costs for consumers. "While that may have been true in the short run, it has now become clear that abrogating sound state laws, particularly consumer protection laws, created an opportunity for regulatory arbitrage that frankly resulted in a 'race-to-the-bottom' mentality," she said. The Comptroller of the Currency and Office of Thrift Supervision routinely preempted state predatory lending laws during the subprime lending boom. (For an overview, see these articles by co-blogger Chris Peterson.) The FDIC chairman said setting a "floor" for consumer protection, based on state and federal laws, would be better than current system of establishing a "ceiling" at the federal level. She suggested that Congress could use a newly proposed financial products safety commission to establish the appropriate floor for consumer protection.  It's refreshing to see at least one federal banking regulator talking sense about this issue.

Posted by Public Citizen Litigation Group on Monday, March 23, 2009 at 11:18 AM | Permalink | Comments (1) | TrackBack (0)

Sunday, March 22, 2009

Study Finds Data Breach Laws Have Only Marginal Effect on Identity Theft

Sasha Romanosky, Rahul Telang, and Alessandro Acquisti, all of Carnegie Mellon, have co-authored Do Data Breach Disclosure Laws Reduce Identity Theft?  Here's the abstract:

Identity theft resulted in corporate and consumer losses of $56 billion dollars in 2005, with about 30% of known identity thefts caused by corporate data breaches. Many US states have responded by adopting data breach disclosure laws that require firms to notify consumers if their personal information has been lost or stolen. While the laws are expected to reduce identity theft, their full effects have yet to be empirically measured. We use panel from the US Federal Trade Commission with state and time fixed effects regression to estimate the impact of data breach disclosure laws on identity theft from 2002 to 2007. We find that adoption of data breach disclosure laws have a marginal effect on the incidences of identity thefts and reduce the rate by just under 2%, on average. While this effect is marginal, reducing identity theft is only one means by which these laws can be evaluated: we appreciate that they may have other benefits such as reducing the average victim's losses or improving a firm's security and operational practices.

Posted by Jeff Sovern on Sunday, March 22, 2009 at 05:31 PM in Consumer Law Scholarship, Identity Theft | Permalink | Comments (2) | TrackBack (0)

Friday, March 20, 2009

Writing With Libel in Mind

Public Citizen has released a guide for bloggers and non-profit organizations about writing with libel considerations in mind.  Nothing can more disable a critic of misconduct by companies or political figures than getting embroiled in a libel suit.  Absent a strong anti-SLAPP statute, one who makes trenchant criticisms is never safe from such litigation, but it is important to know how to write — and check — such criticisms in a way that will avoid litigation or, at least, give the best chance of early exit from litigation with finances intact.

The guide discusses the elementary principles of libel law and explains how to prepare for and conduct a pre-publication libel review.  We emphasize the importance of having a third party, who was not otherwise involved in the preparation of a report or blog post that criticizes individuals or organizations, compare all possibly-defamatory statements with the sources for those statements.  A good libel review is best done by a lawyer familiar with libel litigation, but the guide explains why some review is better than none, even for those who cannot afford a libel expert.

Posted by Paul Levy on Friday, March 20, 2009 at 02:40 PM | Permalink | Comments (0) | TrackBack (0)

Older »

Subscribe to CL&P

RSS/Atom Feed

To receive a daily email of Consumer Law & Policy content, enter your email address here:

Search CL&P Blog

Recent Posts

  • My latest paper: Not-So-Smartphone Disclosures
  • Maryland seeking applications for consumer law endowed faculty position
  • FTC issues ANPR on consumer privacy and data security
  • Today at the CFPB
  • Cal Chief Judge calls for stronger oversight of "private judging," after scandal involving JAMS
  • Maybe it's the Chamber that needs to be held accountable: comments on their ad attacking the CFPB
  • Bruckner & Ryan paper compares complaints about fintech and traditional student loan lenders & servicers
  • GOP legislators accuse CFPB of colluding with states, as Kraninger did
  • WSJ: Equifax Sent Lenders Inaccurate Credit Scores on Millions of Consumers
  • Unfairness and Disparate Effects
  • CFPB analysis of potential impacts of medical debt credit reporting changes
  • OCC CFP: THE IMPLICATIONS OF FINANCIAL TECHNOLOGY FOR BANKING
  • Dan Solove gives the pending privacy bill a B+ but pans preemption
  • Paper responds to Wilf-Townsend's Assembly-Line Plaintiffs
  • CFP: Berkeley Consumer Law Conference
  • The National Consumer Law Center is hiring a LITIGATION DIRECTOR
  • WSJ: CFPB working on guidance to force banks to cover more scams on Zelle and similar apps
  • Consumer law and the "major questions" doctrine
  • Will Congress pass an online privacy bill?
  • Distracted driving kills thousands of people every year
  • Chao paper suggests unjust enrichment claims confer standing, even after TransUnion
  • CFPB issues advisory to protect privacy when companies compile personal data
  • Regulators fine BofA $225 million over botched disbursement of unemployment benefits
  • Consumer protection and the Supreme Court's new "major questions doctrine"
  • CFPB moves to reduce fees charged by debt collectors
  • Vijay Raghavan Essay: Shifting Burdens at the Fringe
  • FTC sues Walmart for facilitating money transfer fraud
  • CFPB affirms states' ability to police credit reporting markets
  • Can you solve the mystery of why the Credit CARD Act treats penalty fees differently from penalty interest rates and other fees?
  • CFPB Spring Regulatory Agenda is up and arbitration isn't on it
  • CFP: CFPB consumer finance research conference
  • My Daughter’s @Delta Disaster Story: The Last Chapter (I hope)

Categories

  • Advertising
  • Arbitration
  • Auto Issues
  • Book & Movie Reviews
  • Books
  • CL&P Blog
  • CL&P Roundups
  • Class Actions
  • Conferences
  • Consumer Financial Protection Bureau
  • Consumer History
  • Consumer Law Scholarship
  • Consumer Legislative Policy
  • Consumer Litigation
  • Consumer Product Safety
  • Credit Cards
  • Credit Reporting & Discrimination
  • Debt Collection
  • Federal Trade Commission
  • Food and Nutrition
  • Foreclosure Crisis
  • Free Speech, Intellectual Property & Consumer Issues
  • Global Consumer Protection
  • Identity Theft
  • Internet Issues
  • Law & Economics
  • Other Debt and Credit Issues
  • Predatory Lending
  • Preemption
  • Privacy
  • Student Loans
  • Teaching Consumer Law
  • Television
  • U.S. Supreme Court
  • Unfair & Deceptive Acts & Practices (UDAP)
  • Web/Tech
  • Weblogs

Archives

  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021

August 2022

Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31