Consumer Law & Policy Blog

Will Russ Feingold, The Senate's Anti-Corporatist, Be Taken Down By Corporate Money?

Senator Russ Feingold voted against the PATRIOT Act and against the authorization of use of force in Iraq. Bucking his Democrat President, he voted against NAFTA. He broke with most Democrats and voted against the nomination of Timothy Geithner. He refuses to accept attack ads on his behalf financed by the Democratic Party. In short, he actually thinks for himself. But $7 million in corporate-sponsored ads may play a role in ending his Senate career. Read about it here.

Amicus Briefs in AT&T v. Concepcion

by Deepak Gupta

The amicus briefs supporting our side in AT&T v. Concepcion are due today.  As they come in, we'll post them here and add them to the case webpage.  (As most readers of this blog are probably aware, the case concerns the enforceability of class-action bans in consumer and employment agreements.)

American Antitrust Institute

American Association for Justice

Constitutional Accountability Center

Lawyers' Commiteee for Civil Rights Under Law, Employee Rights Advocacy Institute for Law & Policy, National Employment Law Project, National Employment Lawyers Association, National Partnership for Women & Families, and National Women's Law Center

Legal Aid Society of D.C., AARP, Center for Responsible Lending, Center for Science in the Public Interest, Consumer Action, Consumer Federation of America, National Association of Consumer Advocates, National Consumer Law Center, National Consumers League, National Legal Aid and Defender Association, Public Good, U.S. Public Interest Research Group

Mary Grace Coneff, et al. (Named Plaintiffs in Related Case)

NAACP Legal Defense & Education Fund, Inc.

National Academy of Arbitrators

National Workrights Institute

Professors of Arbitration

Professors of Civil Procedure and Complex Litigation

Professors of Contract Law

Professors of Federal Jurisdiction

States of Illinois, Maryland, Minnesota, Montana, New Mexico, Tennessee, Vermont, and the District of Columbia

Deception and the CFPB

by Jeff Sovern

The Dodd-Frank Act gives the Consumer Financial Protection Bureau the power to adopt regulations prohibiting deceptive, unfair, and abusive acts, and to bring actions against covered entities that are engaging in such acts.  Dodd-Frank defines unfair and abusive, but not deceptive.  So what qualifies as deceptive? 

One of the canons of statutory construction, the Doctrine of Presumed Adoption, says that when a legislature copies from another statute, it is presumed to adopt interpretations of that statute, unless the legislature says otherwise.  That suggests Congress intended the CFPB to use the same standard the FTC created and articulated in its 1983 deception policy statement: that conduct is deceptive if it is likely to mislead the consumer acting reasonably in the circumstances.

But one of my students, Carey Alexander, has brought to my attention a different argument.  Carey pointed out that § 4301(c)(2) of H.R. 4173, the House version of what became Dodd-Frank, included the following:

2) DECEPTIVE ACTS OR PRACTICES- Any determination by the Director and the Agency that an act or practice is deceptive shall be consistent with the policy statement adopted by the Federal Trade Commission pursuant to section 5 of the Federal Trade Commission Act and dated October 14, 1983.

That language did not end up in the final version of Dodd-Frank.  That suggests that Congress was open to the CFPB using a different definition of deceptive.  It may also be relevant that until 1983, the FTC framed its standard for deception differently: conduct was said to be deceptive if it had a capacity or tendency to deceive the credulous consumer.  The Congressional decision to omit the language quoted above from the final law permits the inference that Congress would find it acceptable for the CFPB to use the pre-1983 FTC standard--or perhaps still another standard.  Moreover, the policies pertaining to deception in the financial context are arguably different from those in conventional consumer transactions because consumer financial transactions tend to be more complex than other consumer transactions--which argues for finding deception more easily.

Given Chevron deference, it is likely that the courts would not upset a determination by the CFPB to use a different standard.  But we'll have to see if the CFPB even wants to.

Prof. Cathy Sharkey on Williamson v. Mazda Motor

NYU law professor Cathy Sharkey has written "The Politics of Preemption: NHTSA, State Tort Law & Automobile Safety" at TortsProf Blog about a significant tort preemption case now before the Supreme Court. Worth reading.

More questionable foreclosure affidavits - of service

4ClosureFraud has compiled a lengthy list of affidavits of lost summons filed in Florida foreclosure cases.  The GMAC and Wells Fargo robosinger affidavits were usually attesting to the ownership of the mortgage loan being foreclosed and whether and by how much the homeowner was behind in payments.  Affidavits of lost summons are used as a substitute for proof that the defendant homeowner has received proper notice of a foreclosure, a basic requirement for due process in judicial foreclosure states.  

Oregonian's Hunsberger on Rebate Cards

by Jeff Sovern

The Oregonian's Personal Finance Columnist, Brent Hunsberger, has a column here on his experience with rebate cards. It turns out that some companies, instead of issuing rebate checks, are issuing cards loaded with the amount of the rebate.  Hunsberger's could be used anywhere that accepts Visa.  But the card was good for less than five months, and Hunsberger didn't use it up during that period.  One thing that I find interesting about that is that under § 4-404 of the UCC, checks are good for at least six months, so if the company had issued Hunsberger a check (without providing that it was good for a shorter time), he would have had a longer period to use the money.  I wonder if this is yet another way for companies to recapture rebates.  Hunsberger points out that in Oregon unclaimed rebates go to the state, so it might not have worked in his case--and maybe that has something to do with the fact that the company relented and has promised Hunsberger a new card with the remainder of the balance.

Ron Lieber Column: How ING's Mortgage Ads Are Misleading

Here.  An excerpt:

The ING Direct loan is called a 5/1 Orange Mortgage, and as of early September, it came with a 3.25 percent interest rate for the first five years and a projected interest rate of 3.375 percent for the 25 years after that.

Yes, you read that right, under 3.5 percent for the next 30 years.

But that is not right, in any number of ways. First of all, by not using the words “adjustable rate mortgage” or similar terms to describe the loan, ING Direct violated a simple Federal Reserve disclosure rule that was revised in 2008.

And that “projected” interest rate suggesting that today’s record low rates will continue for a generation? It is utter nonsense. But ING Direct seems to have had no choice but to use the numbers that it did, because of another relatively new Federal Reserve rule.

For more on the problems with the Truth in Lending disclosures, see my forthcoming Ohio State Law Journal article at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1531781.

Larry Kirsch on the Fremont Case

Larry Kirsch of IMRHE, LLC has written The State Attorney General as Consumer Advocate: A Recent Effort to Tame Unfair Subprime Lending.  Here's the abstract:

In 2008, the Massachusetts Attorney General’s Office obtained a preliminary injunction in state court against Fremont Investment and Loan, a major state-chartered lender active in the subprime mortgage market. The injunction claimed that Fremont’s Adjustable Rate Mortgage loan products and underwriting practices were inherently unfair to borrowers. This article describes the unique and innovative role played by the Attorney General’s Office in enforcing the unfairness arm of a state’s Unfair and Deceptive Acts and Practices statute against abusive financial products and practices. And it suggests that the heretofore underused state UDAP unfairness litigation strategy is available to other states.<

ABC Nightline: Inside Consumer Reports

Here.  (HT: Norm Silber)

FCC Changes Its Safety Guidance On Cell Phone Use

In late June, we told you about San Francisco's ordinance requiring cell phone retailers to inform customers about raditaion from cell phones. Now, the Federal Communications Commission appears to be moving in another direction. In today's Washington Post, Cecilia Kang writes that the FCC "has changed its guidance to cellphone users worried about the health effects of wireless devices, dropping a long-standing recommendation that concerned consumers purchase phones with lower levels of radiation emissions." Read the whole article here.