Consumer Law & Policy Blog

Debt Collection in the News

Yesterday the FTC announced a consent decree with Asset Acceptance obliging them to pay a $2.5 million fine.  The consent decree also requires the collector to disclose to consumers when the collector's suit would be time-barred that the collector will not sue them on the debt.  The FTC's statement is here; coverage in the Times is here.

Meanwhile, the Baltimore Sun reports that the number of suits brought by debt buyers in the Maryland courts may have dropped because of the tough new Maryland rules on collection suits.

When, If Ever, Are Frequent-Flyer Miles Taxable?

Read about it here.

Jeff Gelles Column Reviews the CFPB's First Six Months

Here.  An excerpt:

Although handicapping political battles is above my pay grade, I'm always surprised at GOP willingness to openly block basic rules and enforcement - a perspective shared by Travis Plunkett of the Consumer Federation of America.

"On the one hand, they say, 'Oh, we support consumer protection.' On the other, they've done everything except throw their bodies in front of the agency's headquarters to stop it," he says. "These members of Congress have lined up with Wall Street banks and others in the finance industry who never wanted consumers to have a full-time cop on the beat to watch over them."

Amicus Brief Opposing Ron Paul Campaign Committee on Identification of Anonymous Videographer

by Paul Alan Levy

The process of analyzing for this blog the Ron Paul Campaign Committee’s lawsuit against the anonymous people who created an anti-Huntsman video for this blog impelled me to prepare an amicus brief for the judge who was assigned to the case and had to consider Paul’s ex parte motion for leave to take early discovery to identify the anonymous Internet users who created an attack video savaging the Presidential candidacy of Jon Huntsman while at the same time advocating his election.  The brief explains in considerably more detail why the trademark and defamation claims in the lawsuit are frivolous; for example, we analyze the "false advertising" claim which, although not mentioned in my prevous blog post, is even more absurd than the trademark infringement claim.  But the brief also explaints some of the dangers posed for the future by this lawsuit.

Obscure Senator Raises Profile by Announcing Intention to Boycott Obscure Senate Hearing at Which CFPB Head Cordray to Testify

by Jeff Sovern

Story here.  Senator Wicker objects to Cordray's recess appointment, explaining:

"It is an affront to the democratic checks and balances as established by our Founders, and it constitutes a gross violation of precedent set by those who have come before us."

But because Senator Wicker joined the Republican letter refusing to confirm any nominee to the directorship of the Consumer Financial Protection Bureau unless structural changes were made in the Bureau, we can infer that he doesn't think it's an affront to the democratic checks and balances established by our Founders for senators to refuse to confirm a nominee for a position that Congress has created because of reasons that have nothing to do with the nominee.  Never mind that that letter was unprecedented. 

Incidentally, Senator Wicker is up for re-election this year, and commercial banks are the eleventh largest contributor to his campaign (measured by industry), according to the Center for Responsive Politics. Miscellaneous Finance is right behind at number twelve.

Is Google Advertising Violating Longstanding FTC Rules?

by Paul Alan Levy

For some time, Facebook has been serving me an advertisement from Google’s version of Groupon.  The text promotes an offer for a meal at  a well-reviewed DC restaurant: “this special deal from Zaytinya, Washington’s Most Popular Restaurant as voted in Zagat. Buy it now!”

When I click on the ad, I am taken to the home page of Google Offers (for DC of course), but the page is grayed out by a dialog box urging me not to “miss a single Google Offer” by subscribing.  If I click that off and proceed to the home page, I see an ad for “Chef’s winter tasting menu at Zaytinya” but the legend in the lower right hand corner says “too late,” and if I click through to the page for that offer I learn that the offer is “SOLD OUT.”  At the top of the page, I am again reminded, “Don't miss out! Subscribe to get Washington D.C. offers straight to your inbox.”

I assume that Facebook is immune from liability under Section 230, but isn’t Google running afoul of the FTC’s rules by advertising a product that it doesn’t have available to sell, and, in fact, will never again have the ability to sell? 

Contempt Sanctions Imposed on Copyright Troll Evan Stone

by Paul Alan Levy

I have blogged in the past about the depredations of Evan Stone, a Texas lawyer who has made a business out of suing alleged downloaders of adult movies and shaking them down for settlements because, as he told the Texas Lawyer, “You have people that might be OK purchasing music off iTunes but they’re not OK letting their wife know that they are purchasing pornography.”  (Link goes to a paywall).  Stone bragged that he gets money from almost half of the people he sues, and that he has no intention of actually litigating the cases.   A pretty good business model, that.

After he was caught sending out subpoenas while he was still asking the judge’s permission to start taking discovery, Stone was hit with a sanctions order that included a $10,000 fine and an injunction compelling him to let judges in his other cases know about the sanctions order.  Given the amount of time I have spent defending lawyers in sanctions cases over the years, and my work to fix Rule 11 when its use got out of bounds in the 1980's, I take no joy in seeking them, but you have to read the ruling to get the full flavor of why sanctions were appropriate in this case.

Stone has appealed this order, as of course he has every right to do, but during his appeal he got caught again—he took no steps to comply with the injunction, and, after the deadline the judge set for compliance, he moved for a stay.  But even though he had not obtained a stay, he still did not comply.  Any seasoned litigator would understand that this is a no-no—asking for a stay is not tantamount to getting one.

The district judge was not amused.   He denied the stay, found Stone in contempt, imposed a contempt fine, and ordered Stone to pay $22000 in attorney fees to the appointed lawyers for the Does.  Stay tuned for further developments.

CFPB Head Richard Cordray Testifies Before the House

Read this interesting article on Richard Cordray's testimony yesterday before the House Committee on Oversight and Government Reform. Cordray said that in interpreting statutory phrases meant to curb "unfair," "deceptive," or "abusive" practices, the CFBP will not "go[] off in some wild new unexpected direction."

Last Night's GOP Presidential Debate and the Community Reinvestment Act

by Jeff Sovern

During last night's debate, Representative Paul seemed to attribute the foreclosure crisis partly to the Community Reinvestment Act when he said:

Well, the government . . . gave them a mess. They gave them a financial system that literally created this problem. . . . .[T]he Community Reinvestment Act added more fuel to it, you know, forcing banks to make loans that are risky loans.
So the whole bubble was easily seen. The consequences were anticipated. It was all government manufactured.

Except that as Alan White has explained, the CRA was not the cause of the foreclosure crisis.

The candidates also attacked the Dodd-Frank Act. For example, Governor Romney said "Dodd- Frank . . .made it harder for banks to renegotiate mortgages to help people get out."  And Speaker Gingrich chimed in: "If they would repeal [Dodd-Frank] tomorrow morning, you would have a better housing market the next day."  Yes, and more foreclosures in the future.  Sigh.

Is a Big Deal on Homeowner Mortgage Relief on the Horizon?

The New York Times reports that "[a]bout one million homeowners facing foreclosure could have their mortgage burden cut by about $20,000 each as part of a long-awaited deal taking shape among state attorneys general, federal officials and the nation’s largest mortgage servicers." President Obama hoped to have a deal he could announce in tonight's State of the Union address, but the Times says that is looking unlikely. We'll see.