Consumer Law & Policy Blog

November 2009 Product Safety Recalls

Go here for the vehicle (and related) recalls from the National Highway Traffic Safety Administration and here for the consumer product recalls from the Consumer Product Safety Commission for November 2009.

Government Financial Bailout to Cost $200 Billion LESS Than Originally Projected by Obama Administration

. . . because of quicker-than-expected repayments and economic recovery.

Explosion in Non-Profit Organizations Costing U.S. Treasury Billions

Check out this article in the New York Times concerning the explosion of non-profit public charities organized under section 501(c)(3) of the Internal Revenue Code. A new study by researchers at Stanford, entitled "Anything Goes: Approval of Nonprofit Status by the IRS," shows that about 99.5% of all applications for charitable status are approved by the IRS. And, after a group is formed, there's little oversight of its supposedly charitable work. A new group is approved by the IRS about every 10 to 15 minutes. The number of 501(c)(3)s has increased by 60% in the last decade. 501(c)(3)s pay no taxes.

Bank of America To Pay Back Bailout Funds, Allowing It To Offer A New CEO Whatever It Wants

Here's one that I missed. This Washington Post article explains that Bank of America will be the first corporate recipient of "extraordinary federal assistance" to pay back all of its Treasury Department bailout funds --- in BOA's case, $45 billion. The main focus of the article is that the pay-back will free BOA from government pay czar Ken Feinberg's executive compensation oversight and allow it to offer whatever it wants in trying to attract a new CEO.

Why Jenzabar expert's affidavit about Google search rankings is unreliable

by Paul Alan Levy

Last month, I posted briefly about an affidavit from Frank Farance, the former high school math wizard whose expert testimony has been offered by Jenzabar to contradict Google’s announcement that it does not use keyword tags in computing search ranking.  The affidavit was submitted to try to stave off summary judgment in a case where Jenzabar is suing documentary film-makers Long Bow Group claiming trademark infringement because Jenzabar’s name is in the meta tags for a page about the later life of Ling Chai, who founded Jenzabar but was a leading character in a Long Bow documentary.

Drawing in part on useful responses to my post by commenters on Techdirt and Dave Farber’s Interesting People, we have submitted a brief explaining why Farance’s affidavit fails the Daubert test for reliability of expert testimony. 

This post was a useful experiment in crowd-sourcing the analysis of technical testimony.  We also received private communications from individuals who either are former Jenzabar staff, or knew Farance personally, and who provided valuable insights about both of them.  We are grateful for their assistance.

House to Consider Consumer Protection Bill Next Week

According to the House Financial Services Committee, it has completed work on the Wall Street Reform and Consumer Protection Act, (H.R. 4173), which would create the Consumer Financial Protection Act and also contains mortgage reform and anti-predatory lending provisions, and the House is scheduled to vote on the bill next week.

Congressional Hearing on Legislation to Overrule Iqbal and Twombly

We blogged here last July about legislation introduced by Senator Specter to overrule the Supreme Court's decisions in Bell Atlantic v. Twombly and Ashcroft v. Iqbal, which heightened pleading requirements for plaintiffs. Civil rights and consumer organizations, among others, have argued that the decisions are unfairly keeping plaintiffs out of court.

Today, there was a Senate hearing on the legislation. This Legal Times blog entry explains that some Senators, including newby Al Franken, gave lawyer Greg Garre a hard time for maintaining that there was not enough evidence to show that Iqbal and Twombly were unfairly hurting plaintiffs. Garre won the Iqbal case when he was in the Solicitor General's office.  (He's now in private practice.)

Jeff Gelles Columns on How Opting Out of Overdraft Protections Didn't Help One Consumer

Here and here.  The consumer had opted out of overdraft coverage of his debit card charges and had moved money into his account to cover the charges, but still got hit with $630 in fees for overdrafts.

Federal Housing Administration To Make It Tougher To Get A Home Loan

The days of "just sign here and worry about payment later" may have really ended in the home mortgage market. The Washington Post reports here that the Federal Housing Administration is proposing to toughen rules for home-loan borrowing in two key ways: demanding more up-front money and higher credit scores. As the Post explains:

The Federal Housing Administration is proposing to increase the up-front cash paid by borrowers as part of an effort to shore up the agency's finances, which have been staggered by rising defaults in its flagship mortgage insurance program, according to FHA officials.

The changes also include raising minimum credit scores for borrowers who receive FHA-backed mortgages and limiting the amount of money sellers can kick in, including paying closing costs or giving free upgrades.

Currently, the FHA backs about 30% of initial home loans and 20% of refinancings.

American children are not getting enough to eat

The New York Times reports that one in four American kids are now on food stamps. But, only two thirds of those who qualify actually receive assistance.