Consumer Law & Policy Blog

Mike Konczal on Why Preemption of State Consumer Law is a Bad Idea

Here. It's an excellent summary of the argument.

More on the Progress of the Financial Reform Legislation in the Senate

Here.

Remember to Check Out the Financial Reform Scorecard

The Senate continues to vote on amendments from all sides on the financial reform legislation. Learn about each amendment and how each Senator voted, as U.S. PIRG's excellent scorecard begins to fill out.

Consumer and Privacy Advocates Ask the FTC to Go After Facebook

The Electronic Privacy Information Center and more than a dozen other consumer and privacy advocacy groups have filed a complaint with the Federal Trade Commission alleging that Facebook regularly violates its users privacy rights by providing users' personal information to third parties. The complaint claims that Facebook is committing a variety of unfair and deceptive acts and practices in violation of section 5 of the Federal Trade Commission Act and asks the FTC to force Facebook to clean up its act. The complaint is available here. The first two paragraphs of the complaint summarize the allegations:

This complaint concerns material changes to privacy settings made by Facebook, the largest social network service in the United States, that adversely impact the users of the service. Facebook now discloses personal information to the public that Facebook users previously restricted. Facebook now discloses personal information to third parties that Facebook users previously did not make available. These changes violate user expectations, diminish user privacy, and contradict Facebook’s own representations. These business practices are Unfair and Deceptive Trade Practices, subject to review by the Federal Trade Commission (the “Commission”) under section 5 of the Federal Trade Commission Act. The following business practices are unfair and deceptive under Section 5 of the Federal Trade Commission Act: Facebook disclosed users’ personal information to Microsoft, Yelp, and Pandora without first obtaining users’ consent; Facebook disclosed users’ information—including details concerning employment history, education, location, hometown, film preferences, music preferences, and reading preferences—to which users previously restricted access; and Facebook disclosed information to the public even when users elect to make that information available to friends only.

U.S. PIRG's Consumer Blog discusses the complaint here.

The Status of Financial Reform in the Senate

This article in today's New York Times explains a push by Senate "liberals" to amend the pending financial reform legislation to break up the large banks and to audit the Federal Reserve, among other things. It notes that some Republican "conservatives" may be their best pals.  Here are a couple excerpts:

The liberal amendment that could be hardest to defeat — and is among the most deeply dreaded by Wall Street — also has some of the purest populist appeal: a proposal by Senator Sherrod Brown of Ohio and Senator Ted Kaufman of Delaware to break up the nation’s biggest banks by imposing caps on the deposits they can hold and limits on other liabilities. * * * Another case in point is the proposal by Mr. Sanders, a self-described socialist, who is feeling bullish about his amendment requiring a public audit of the Fed. Mr. Sanders’s idea is opposed by the Fed and the White House, which view it as an encroachment on the central bank’s traditional independence. Conservative Republicans like David Vitter of Louisiana also support the idea, and Mr. Sanders says he believes he can win the 60 votes needed to attach his proposal to the bill.

Elizabeth Warren on the CFPA on Colbert

Here.  A highlight: Colbert, after noting that we already have bank regulators, asked why we need both belts and suspenders.  The reply: "Right now, we don't have any pants on."  (HT: New Deal 2.0). 

D.C. Council To Pass Landmark School Nutrition Legislation

The first page of today's Washington Post has this article on the D.C. Council's consideration this coming Tuesday of the nation's most far reaching school nutrition legislation. Among other things, it will mandate low-fat, low-calorie school meals, and ban trans fats and limit sodium and saturated fats in school foods.  It will also require students to take more phys ed.  Proponents estimate that implementing the law will cost the District $23 million per year, and to pay for that, the Council is considering a controversial penny-per-ounce tax on soda.

The Shadow Terms: Contract Procedure and Unilateral Amendments

David Horton of Loyola Law School has an interesting and timely new article in the UCLA Law Review exploring the increasing phenomenon of companies using the authority of blanket "change-in-terms" provisions to unilaterally revise the terms of consumer contracts, often in an attempt to evade or stay one step ahead of court review.  For example, cell phone companies whose arbitration clauses have been struck down as unconscionable have have invoked change-in-terms provisions to impose more consumer-friendly arbitration clauses on their customers in an attempt to salvage their bans on class actions.

The article makes a case for legislation that would ban such unilateral revisions. Here's the abstract:

For decades, courts and commentators have debated the normative implications
of contract procedure. Conservatives argue that mandatory arbitration clauses reduce
the burden on the judicial system and that class arbitration waivers, choice-of-law
clauses, and jury trial waivers allow businesses to pass litigation savings to their
consumers in the form of lower prices. In response, liberals object that contract
procedure dilutes substantive rights and runs roughshod over important jurisdictional
and constitutional values.

This Article argues that neither view has accounted for a defining trait of contract
procedure: the regularity with which drafters unilaterally amend procedural terms.
Indeed, many standard form consumer agreements and a growing number of state
statutes authorize drafters to revise procedural terms unilaterally. The frequency
with which drafters exercise this power undermines the foundational conservative
theory that sophisticated adherents can exert market pressure on drafters to offer
efficient procedural terms. However, the liberal model of contract procedure—which
urges courts to nullify procedural terms that erode substantive, jurisdictional, or
constitutional interests—creates perverse incentives. Drafters respond to judicial decisions
voiding procedural terms by amending their terms again. The target audience
for these revisions is not the adherents who will be subject to them, but the courts who
will adjudicate their validity. This “private conversation” between corporations and
courts not only widens the informational gulf between drafters and adherents, but
increases the burden on the judicial system. To end this pernicious feedback loop, the
Article encourages policymakers to eliminate drafters’ ability to amend procedural
terms unilaterally.

Recall News

Kids' Tylenol and similar kids' products have been recalled because they may be more potent than alleged on the product label.

Go here for the April 2010 product recalls from the Consumer Product Safety Commission.