Consumer Law & Policy Blog

The Lost Decade (and then some) for college graduates

How valuable is that college degree? The Economic Policy Institute reports that in the first decade of the 21st century wages for new college grads have declined by about 5% (adjusted for inflation of course). Those wages went up some in the 1980's and a lot in the 1990's.

Comparing the Foreclosure Crisis in the U.S. and Europe

At Credit Slips, Alan White has this interesting post comparing the foreclosure crisis in the U.S. and Europe. Default rates are considerably lower in Europe, in part it appears because banks in Europe were not as loose with their mortgage lending. Foreclosure rates in Europe are also lower than in the U.S. For example, "[i]n 2009 there were about one million completed foreclosure sales in the US (out of about 60 million mortgages outstanding.)  In the UK there were 54,000 (out of about 15 million mortgages.)"

 

Electric Cars

This LA Times article by Jerry Hirsch discusses pluses and minuses in terms of cost and convenience of electric cars. Go to the links along the left side of the article for more information on how and where to charge electric car batteries, a glossary of electric car terms, etc.

Netfirms Hosting Service Sued for Releasing Email Address to Thai Officials Investigating Criticism of Their King

by Paul Alan Levy

I have blogged in the past about servile Internet hosts that provide information in response to subpoenas without giving their customers a chance to oppose discovery by showing that they have done nothing wrong.  This fact confirms the importance of the notice component of the “Dendrite” test for identifying anonymous speakers.  A lawsuit filed yesterday, however, shows the impact that routine disclosure may have. 

Anthony Chai, a naturalized US citizen who emigrated from Thailand, runs a computer store in California.  Using the store's computers, Chai and his customers posted anonymous comments critical of the king of Thailand on a Thai-language pro-democracy website, Manusaya.com.  Thailand forbids criticism of the king – the legal principle of lèse majesté – and when the Canadian Internet hosting firm Netfirms (which is incorporated in Delaware and maintains a US office) received a complaint from the Thai government, it not only shut down the web site but provided Chai’s IP address and two e-mail addresses associated with the posts.  Thailand has long shown its insistence on applying the principle even to criticism voiced in other countries, when the speakers expose themselves to its authority by, for example, visiting the country. 

When Chai was home visiting family in Thailand, he was detained at the airport and subjected to extensive questioning and to threats of violence against his family both in the United States and in Thailand.  He was also repeatedly questioned in the United States, with prosecutors using the threat of prosecution, and dangling the possibility that the charges could be lifted if he cooperated by providing more information about others.  The prosecutor also demanded expensive gifts.  Chai has been officially charged in the Thai courts with lèse majesté, and consequently he can no longer return to his native land to visit his family.  Ironically, most of Chai's posts were directed at the injustice of the lèse majesté laws, rather than at the Thai king himself.

Represented by Human Rights USA, Chai has now filed suit against Netfirms seeking relief for negligence, violation of Section 17200 of the California, as well as violations of his constitutional right of privacy (the California constitution has been held to extend to some private conduct).  Kudos to Human Rights USA and the firm of Snell and Wilner which has taken the lead in pursuing this important case.

Institute of Medicine: Vaccines Are Generally Safe and Effective and Do Not Cause Autism

The Washington Post reports here that, according to a comprehensive study just released by the Institute of Medicine, vaccines are generally safe and effective. They do not, the IOM found, cause autism, as some patient advocacy groups have claimed (discussed here). Here's an excerpt from the Post article:

Vaccines are generally safe for most people, the National Academy of Sciences has concluded, dismissing stubborn concerns about supposed links to autism and other serious health problems. In the academy’s first comprehensive review of vaccine safety in 17 years, a committee of experts formed by the Institute of Medicine analyzed more than 1,000 research studies. They concluded that benefits outweigh the risks, which are rare and usually not life-threatening. In a 667-page report released Thursday, the 16-member committee found convincing evidence that vaccines can cause 14 health problems, including seizures, brain inflammation, rashes and fainting, but said those complications appeared to be very uncommon. The committee also concluded there was evidence that some vaccines could cause other complications, such as allergic reactions and temporary joint pain. But the committee found no link between being immunized and the most serious health problems that have raised concern, including autism and Type 1 diabetes.

Go here to read the report and related information.

Banks Urge More Regulation ... of FarmVille

Although banks have spent millions lobbying against the CFPB's regulatory authority, they are OK with regulating virtual banks. Credit.com reports that the American Bankers Association asked the agency last week to consider regulating virtual currencies like those used in the popular game FarmVille. The group writes that virtual credits have been "used to pay developers of applications, and their use can be expected to expand even further." 

Foreclosure Crisis Year Five

            It would be tempting to entitle this post the Permanent Foreclosure Crisis.  The newly released National Delinquency Survey (2^nd quarter 2010) from the Mortgage Bankers Association is not encouraging.  Even MBAA’s usual positive spin had to be tempered:  “. . . the downward trend we saw through most of 2010 has stopped.  Mortgage delinquencies are no longer improving and are now showing some signs of worsening.”

             Foreclosure starts are still at triple pre-crisis levels, albeit down from a peak of quadruple their normal levels reached in 2009.  The total foreclosure inventory remains stuck at around 4.5%, a level also first reached in late 2009, a level that is about five times pre-crisis levels.  Total past-due mortgages have eased a bit from the crisis high in the first quarter of 2010, from 14.7% back to 12.9%, but are still at one out of every eight homeowners with a mortgage (compared with one in twenty in normal times.) 

             Meanwhile total mortgage modifications in June were down by half from their peak level in March 2010, meaning that the efforts to restructure home debt are losing steam, while the machinery to foreclose and sell more homes at 60% losses into a oversaturated market grinds on.   Total outstanding mortgage debt remains at unsustainable levels in excess of $10 trillion, inching down at about 1% per quarter, while home values continue to erode much more rapidly.   Present policy is clear:  the housing debt bubble will be deflated via an agonizingly slow process of foreclosures and a vain hope for a rebound in home prices.  The consequences of present policy are also clear – stagnation in the housing market, and hence the general economy, for the foreseeable future.

BigTobacco Sues the FDA on First Amendment Grounds Seeking to Nix New Package Warnings

A couple months ago, we posted about the Food and Drug Administration's nine graphic cigarette labels slated to go into effect in September 2012. Under FDA regulations, one of the nine warnings would take up the top half of each cigarette package and at least 20% of each cigarette adverstisement. Each new label would include a national quit-smoking hotline telephone number, 1-800-QUIT-NOW.

As expected, the tobacco industry -- actually, only five tobacco companies, including R.J. Reynolds, Lorillard, and Liggett -- has filed a federal court complaint against the FDA, principally on First Amendment grounds (but also on administrative law grounds). The suit seeks a declaration that the regulations imposing the new labels are unlawful and an injunction against enforcement of the regulations.

Here's part of the complaint's introduction, which summarizes the industry's First Amendment challenge:

These requirements force [the tobacco industry], not to convey purely factual and uncontroversial statements about the risks of tobacco use, but rather to become a mouthpiece for the Government's emotionally-charged anti-smoking campaign. ... This is precisely the type of compelled speech the First Amendment prohibits.

The Latest NCLC Practice Tools

New NCLC practice tools:

 1. New 7th ed. of Fair Debt Collection (now 2 volumes) and new 2d. ed. of Collection Actions.  Automatic subscribers should have received these two major revised editions of our popular treatises on the FDCPA and defending collection lawsuits--essential updates.  Others can obtain them at www.nclc.org/updates.

 2. Six New Supplements.  Subscribers have also received  Aug. 2011 supplements for Foreclosures, Cost of Credit, Consumer Warranty Law, Credit Discrimination, Consumer Banking and Payments Law, and Consumer Class Actions. Others can obtain them at www.nclc.org/updates.

3. Companion Websites updated:  Each title includes an updated companion website with pleadings, agency interpretations, legislative and regulatory history, other key resources, ready to copy/paste, download, or print.  Access is free as long as you keep the title current.

 4. NCLC REPORTS for May/June (to subscribe and for back-issue information, call 617-542-9595):  

Deceptive Practices & Warranties Ed: Sup. Ct. limits class actions; keeping a class action in state court; post-Concepcion arbitration update; large UCC statutory damages for yo-yo sale.

Consumer Credit & Usury Ed:  Special Issue: July 21 D-Day for Dodd-Frank.

Bankruptcy & Foreclosures Ed:  FAQs on mortgage strip-offs; proving borrower inquiry is a valid Qualified Written Request.

Debt Collection& Repo Ed: statute of limitations for cell phone collections; collector voicemail often violates the FDCPA.

 5.  Consumer Rights Litigation Conference, Nov. 3-6 at luxurious Fairmont Chicago, Millennium Park Hotel .  The consumer law highlight of the year; last year over 1000 attendees!  A full lineup of fabulous speakers on over 100 topics to choose from, the Class Action Symposium, and full or half day sessions on mortgage litigation and foreclosure defense, consumer bankruptcy, the FHA and RHS Loan Programs, student loan borrowers, and debt collection suits. CLE available.  Register here now.

Debit Card Overdraft Fees Are Now Opt-In, But They Pack A Punch

In a rule that became effective on July 1, 2010, the Federal Reserve Board prohibited banks from charging consumers fees for overdrafting on ATM and one-time debit card transactions, unless the consumer opts in to an overdraft service for those types of transactions. Opting in allows a consumer to overdraft -- that is, to pay for an item with a debit card or withdraw money with an ATM card, even though the consumer didn't have enough money in her account. After overdrawing, the consumer gets hit with the overdraft fee. The consumer then must pay back the overdraft and pay the overdraft fee.

A new study by the Consumer Federation of America (CFA) of the 14 largest U.S. banks shows that the average fee is about $35, and many big banks will hit consumers with multiple fees per day, one for each overdraft. What's more, the average overdraft fee is considerably more than the average overdraft (about $20). Today's New York Times has this story on the issue.

The press release accompanying CFA's report explains how banks get consumers to pay up after they get hit with overdraft fees:

Overdrafts and fees must be repaid immediately to avoid extra fees or as soon as the next paycheck or benefit check hits the customer’s account. Banks repay themselves directly out of the consumer’s funds, making overdrafts balloon payment loans and the top priority for scarce family funds.