Consumer Law & Policy Blog

Javelin Marketing Seeks to Suppress Criticism of Its "Insurance Leads" Sales

by Paul Alan Levy

A company called “Javelin Marketing,” which in turn operates a business called “Prospect Match” that generates and sells insurance leads, recently tried to suppress criticism of its business practices on several pages of Insurance Forums web site by threatening to sue the host of the forum.  Trying to get around the forum’s section 230 immunity, Javelin’s lawyer, a self-proclaimed Internet law specialist named Richard Newman,  included claims for “false advertising” and “trade libel” under section 43(a) of the Lanham Act.   Newman compounded his error by threatening to sue for copyright infringement if the operator of Insurance Forums posted his demand letter.  That demand letter is posted here. 

The threatening lawyer knew better than to put this in his own letter, but his client was not so cautious, including this choice line in his correspondence with the operator of Insurance Forums:   "I really don’t care what the law allows you to do.  It’s a more practical issue.  Do you want to send your attorney a check every month indefinitely as I continue to pursue this? Now, we will both spend needless money and when you get sick of paying your attorney, you will take down the posts."

Debt Buyer Dismissed

A Pennsylvania appeals court has affirmed the dismissal of a debt buyer lawsuit on an old credit card account, because the debt buyer could not prove the debt. The credit card agreement and account history could not be admitted under the business records exception to the hearsay rule.  The debt buyer could not testify that the credit card account records were made contemporaneously and in the regular course of the issuing bank's business. 

More importantly, the contract itself was not proven.  The debt buyer offered a standard form cardholder agreement dated seven years after the consumer's account was allegedly opened.  In addition, the interest rate charged by the debt buyer was higher than the "agreement" called for, and the "agreement" did not provide for the attorney's fees being sought. 

As many consumer attorneys know, the lack of evidence is endemic to the debt buying industry.  Pools of delinquent accounts are often sold with "media not readily available", i.e. with no account histories or signed contracts.  Given that signed cardholder agreements no longer exist, collection attorneys are often hard-pressed to produce anything that could be called a contract to support their claim.  The Federal Trade Commission issued a report on related debt buyer practices last July, but offered only recommendations directed to state courts to discourage these practices.  It remains to be seen whether the CFPB will take regulatory and enforcement action under the Fair Debt Collection Practices Act, which after all, prohibits false representations of the validity or amount of a debt, including false statements that are reckless or negligent, i.e. debt buyers alleging amounts owed based on little more than a spreadsheet they purchased for 0.6 cents on the dollar.

The Court's citation of Judge Boyko's decision dismissing foreclosure cases for similar want of proof illustrates the continuing erosion of the credibility and deference the banking industry once enjoyed with state courts.

HT to Cary Flitter.

Times Articles on APR and Libel Claims for Critical Reviews

The Sunday Times had two interesting pieces on consumer law issues.  One was about problems with using the APR to determine which of two mortgages is cheaper: because the APR omits some credit costs and assumes that the borrower will not pay off the mortgage early, it can be misleading.  The other--the Haggler column by David Segal--is about how a business used the threat of a criminal prosecution for libel when a dissatisfied consumer posted a critical review on the web.

Foreclosure crisis in Pictures

Here is a compelling photojournalist essay on the foreclosure crisis in Florida, including the faces of homeowners, tenants, and lawyers swept up in the tidal wave.

Stipanowich Paper on the Struggle to Shape American Arbitration

Thomas Stipanowich of Pepperdine has written Revelation and Reaction: The Struggle to Shape American Arbitration in CONTEMPORARY ISSUES INTERNATIONAL ARBITRATION AND MEDIATION: THE FORDHAM PAPERS 2010, Martin Nijhoff, 2011.  Here's the abstract: 

In this article, Professor Stipanowich explores recent decisions by the U.S. Supreme Court and the implications for the respective domains of courts of law and arbitration tribunals regarding so-called “gateway” determinations surrounding the enforcement of arbitration agreements and the contracts of which they are a part. The decisions address the complex interplay between federal substantive law focusing on questions of arbitrability, a body of law defined and expanded by the Court under the Federal Arbitration Act (FAA), and the law of the states and bring into play competing judicial philosophies of contractual assent and contrasting views about the balance between policies promoting the autonomy of contracting parties and judicial policing of overreaching in the context of contracts of adhesion.

According to Prof. Stipanowich, the Court’s current jurisprudence, which may be seen as establishing and expanding a “second tier” of the “revealed” substantive law of arbitrability under the FAA first given shape and substance in the 1980s, is a flashpoint for special concerns associated with standardized contracts directing consumers and employees to arbitrate. Prof. Stipanowich believes that this will inevitably add momentum to current efforts to enact national legislation outlawing pre-dispute arbitration agreements in consumer, employment and other classes of contracts, with possible negative consequences for business-to-business arbitration.

In part I of his article, Prof. Stipanowich offers a short history of the evolution of Supreme Court decisions concerning the “revelation” and expansion of federal substantive law under the Federal Arbitration Act (FAA). Parts II and III then discuss recent Supreme Court cases reflecting the Court’s continuing reliance on the wellspring of divined federal law as a basis for promoting party autonomy in arbitration while limiting lower courts’ ability to police such agreements. Part IV briefly explores the dynamic political response to the extreme, non-nuanced pro-arbitration position developed in modern Court jurisprudence. Finally, Prof. Stipanowich concludes the article by calling for carefully crafted legislation or administrative regulations limiting the use of arbitration agreements in adhesion contracts or establishing due process standards for such agreements.

Government Says that Toyotas Don't Have Sudden-Acceleration Problems; Consumer Advocates and Plaintiffs' Lawyers Disagree

Yesterday's Washington Post reported that the widely discussed Toyota sudden-acceleration problem does not exist. As the Post put it:

Government investigators have rejected claims that electronic defects caused Toyota cars and trucks to accelerate out of control, a finding released Tuesday that offers a measure of long-awaited vindication for the world's largest automaker and shifts blame to the drivers who reported the incidents.

But according to a plaintiff's lawyer involved in the issue:

"Our experts tell us that the report is just wrong, and they are confident that they are going to be able to show that the electronic throttle control contributed to unintended acceleration," said Steve Berman, co-lead plaintiffs' counsel in a class-action suit filed on behalf of millions of Toyota owners who say the controversy caused their cars' value to drop.

And Clarence Ditlow, the head of the Center for Auto Safety, questions the government's methodology:

 "Their report points out that only one in 100,000 cars have had unintended acceleration, but then they tested only nine vehicles," he said. As a result, he said, the odds of the scientists finding a vehicle with the problem were very slim. 

The government's study and related information can be found here, including the government's full 175-page report.

Should TV Drug Ads Focus on Treatment of Illness Instead of Selling Specific Products?

In this NY Times op-ed, Ian Spatz says that drug companies' TV ads for specific products should be replaced with ads jointly crafted by industry competitors discussing treatment options for certain medical conditions, and he thinks Congress should pass an amendment to the antitrust laws to make it happen.

WSJ Article on CFPB Enforcement Chief Richard Corday

Here.  A subscription is required to read more than the first two paragraphs.  Here's a brief excerpt, which may whet your appetite enough to obtain that subscription: 

Asked in the interview how soon the Consumer Financial Protection Bureau would start bringing enforcement actions, Mr. Cordray said: "I will be seeing to it that we will be ready with some of our priorities immediately."

Mr. Cordray said mortgages, credit cards and student loans are high on his enforcement agenda. No decisions will be made until the agency digs into problem areas and sets its "priorities accordingly," he said. "I don't prejudge what we're going to find."

CFPB Working on TILA/RESPA Disclosure Forms

 

More on the CFPB's Agenda

by Jeff Sovern

The National Law Journal has an interesting article on the response of lawyers representing businesses to the CFPB, headlined "Agenda Unknown" (I can't post a link because it requires a subscription).  As the headline implies, the basic idea is that they can't predict what the Bureau will do.  I cannot help but wonder whether industry lawyers had a clearer understanding of, say, the FTC's agenda when it was first ramping up.  The piece also mentions some Bureau hires and offers speculation about who the first Director will be.  Here's a quote that is particularly entertaining:

[Stephen] Ryan of McDermott Will [& Emery] predicted the bureau will move swiftly to crack down on pay-day and tax-refund loans.

But he noted that millions of people use these products, and taking them away amounts to "treating taxpayers like dogs not allowed to eat the dog food they want." As the bureau moves forward, Ryan said, he hopes its focus will be on "notice, education and transparency, rather than telling people they can't do something."

Looks like the lobbying has begun.  Since we know that notice, education, and transparency often don't affect consumer decisions, that may among to little more than permitting lenders to continue doing what they're doing and just providing consumers more disclosures they ignore.