Consumer Law & Policy Blog

Jill Gross on AT&T Mobility

Jill Gross

 of Pace has written At&T Mobility and FAA Preemption, forthcoming in the Penn State Dickinson School of Law Yearbook on Arbitration and Mediation.  Here's the abstract:

The Supreme Court's recent arbitration law decisions reflect the Court's strong support for arbitration agreements, but also severely limit the states’ powers to police the fairness of arbitration. In particular, the Court’s decision in AT&T Mobility v. Concepcion, LLC expands the FAA preemption doctrine beyond its prior boundaries, signaling how far the Court is willing to go to support arbitration clauses at the expense of states’ rights and the values of federalism. This article explores the impact of AT&T Mobility on the preemption of state arbitration law, and the concomitant impact on the balance between state and federal power in the arbitration arena. This article argues that AT&T Mobility results in FAA over-preemption, as it unduly shifts arbitration law-making power away from the states, in violation of the FAA’s savings clause.

Paper Finds Evidence of Redlining and Race-Based Discrimination in Subprime Loan Pricing

Andra C. Ghent

 of Arizona State University (ASU) - Finance Department and

Ruben Hernandez-

Ruben Hernandez-

Murillo and

Michael Owyang

, both of the Federal Reserve Bank of St. Louis have written Race, Redlining, and Subprime Loan Pricing.  Here's the abstract:

We investigate whether race and ethnicity influenced subprime loan pricing during 2005, the peak of the subprime mortgage expansion. We combine loan-level data on the performance of non-prime securitized mortgages with individual- and neighborhood-level data on racial and ethnic characteristics for metropolitan areas in California and Florida. Using a model of rate determination that accounts for predicted loan performance, we evaluate the presence of statistical and taste-based discrimination, as well as disparate impact and disparate treatment discrimination, in mortgage rates. We find evidence of redlining as well as adverse pricing for blacks and Hispanics.

POM Wonderful Takes on FTC in New Advertising Campaign

On Wednesday, we blogged about a decision of an FTC adminsitrative law judge holding that POM Wonderful's claims that its products prevent or treat heart disease, prostate cancer, and erectile dysfunction were false and unsubstantiated. POM has responded with a new ad campaign saying that, under the FTC's ruling, it can still advertise about the product's "health benefits" (for instance, that drinking pomegranate juice "supports prostate health") as opposed to making a specific disease prevention or mitigation claim (for instance, saying that drinking the juice prevents prostate cancer).

UPDATE: More on this topic from the Washington Post: "Pom tests limits of FTC power with ad campaign"

New Resources from NCLC

This update lists NCLC’s new reports, webinars, our conference, and other practice tools:

1. FTC releases important Advisory Opinion on its rule Preservation of Consumer Claims and Defenses, strengthening the ability of consumers to get affirmative recoveries from assignees and other note holders. 

2. Register for NCLC’s Summer Mortgage Conference 2012 at the L’Enfant Plaza Hotel, Washington, D.C. July 17-18, 2012. For more information about the conference, to register, and hotel reservations.

3. How to set up an effective foreclosure mediation program in your state—see NCLC’s Rebuilding America.

4. An in-depth look at how errors by criminal background checking companies harm workers and businesses.

5. NCLC REPORTS (March/April 2012):

Deceptive Practices & Warranties Ed.: new federal statutory changes re removal, diversity, jurisdiction and venue; 3^rd Cir. upholds arbitration class arbitration ruling; what you don’t know about check payments.

Bankruptcy & Foreclosures Ed.: loan modification or curing a default in bankruptcy for widows, orphans, and divorcees; Treasury announces HAMP Tier II Loan Mod Program

Debt Collection & Repo Ed.:  11^th Cir finds FDCPA applies to mortgage debts; 9^th Cir finds owner of debt collection agency personally liable; 8^th Cir. rejects FDCPA claim for litigation abuse; 4^th Cir. finds no federal banking preemption for repo claims

Consumer Credit & Usury Ed.: BofA settles ECOA/FHA claims against Countrywide; Can you toll the TILA statute of limitations

6. NCLC free webinar series continues:  
Wednesday, May 30 at 2PM EST:   “Alternatives To Bankruptcy: Advising Seniors When Bankruptcy Is Not An Option.” Contact:  jhiemenz@nclc.org  for this and future webinars. 
Also, FREE downloads of over 50 past webinars.  
Have ideas for future webinars?  Please fill out our short survey.

Vehicle Crashworthiness Safety Ratings

Jeff's post on the simplicity of giving grades to banks as a method of providing consumer information got me thinking about the five-star system for vehicle crashworthiness used by the National Highway Transportation Safety Administration. So long as the ratings are accurate, the five-star system seems like a good idea for the reasons Jeff says: It conveys useful information, and it is easy to understand. As NHTSA puts it: "More Stars equal Safer Cars. 5-Star Safety Ratings measure the crash worthiness and rollover safety of vehicles. Five stars is the highest rating, one is the lowest." Pretty simple.

It's not quite that simple because rated vehicles actually have three separate ratings: one for frontal-crash safety; one for side-crash safety; and one for rollover safety. And this year, NHTSA began assigning an overall safety star rating as well. So, for car X, you'll know whether it is very good (5), quite bad (1), or something in between.

NHTSA's website on the topic works well. You can search vehicles by model, class, and manufacturer, and you can compare vehicles. I was surprised by some of the ratings, which tells me that it's worth checking the website before you buy a car. I would have assumed that my little 5-door Prius was not very crashworthy. It seems so flimsly and light. Actually, this year's model gets a 5 overall (and the 2009 model, which I own, gets a 4).

You may want to read NHTSA's FAQs on the 5-star program.

Advantages of Arbitration

The New York Times yesterday published (online) a piece by the lawyer who handled and won AT&T v. Concepcion called The Advantages of Arbitration. In his piece, Andrew Pincus says that the court system is not actually a good option for consumers because it is slow and costly, and "most legal injuries are too individualized and too small to attract a lawyer’s assistance." He does not acknowledge that class actions provide an avenue for relief in just that circumstance -- when the individual's injury is small but the number of individuals injured is large -- or that an individual who has trouble finding a lawyer to handle a case in litigation will likewise have trouble finding one to handle a case in arbitration. The piece also does not address costs of arbitration or any of its limitations. Overall, a well-written but entirely one-sided view, advocating against consumers' and employees' access to the civil justice system.

THe CFPB Proposes New Non-Bank Supervision Rules

As discussed here by Jenna Greene of the National Law Journal:

The Consumer Financial Protection Bureau released a draft rule May 24 outlining how it plans to supervise debt collectors, consumer reporting agencies, money services companies and other small nonbanks that engage in "activities that pose risks to consumers." The draft rule sets out procedures to notify a nonbank that it is being considered for supervision and outlines how the nonbank can respond. Companies under CFPB supervision may be required to submit reports to the agency and undergo examinations.

Go here to view the proposed rules. The public has 60 days to comment.

U.S. Senate Unable to Pass Student Loan Bill

As we've explained, if Congress doesn't act by July 1, interest rates will double on federal student loans. The Senate today rejected both a Democratic bill and a Republican bill, which is what happens when you combine the filbuster rule with strict party-line voting and a Senate in which neither party has 60 members. This AP story describes the situation:

Both [the Democratic and Republican] measures rejected Thursday would delay the interest rate increase for a year at a cost of $6 billion, but each side's bill was paid for in a way the other couldn't tolerate. Democrats proposed raising Social Security and Medicare payroll taxes on high-earning owners of some privately held companies and professional practices, while Republicans would abolish an Obama preventive health program.

UPDATE: Read more here.

A welcome move from Google

by Paul Alan Levy  

I will confess that, as a lawyer who has dedicated his career to the public interest movement, I was disappointed when Fred von Lohmann, one of the top lawyers at the Electronic Frontier Foundation, left to work inhouse at Google.  Not only was the public interest movement losing one of its leading lights, an astonishingly bright and creative lawyer, but it just seemed to me typical of the whole problem of Google buying up the top talent, whether directly by hiring them or compromising them by making donations.  (Public Citizen simply does not take corporate contributions, including contributions by foundations controlled or funded by corporations).  

But Fred's recent blog post about one of his major projects, transparency in removals, reminds us of what good people can do from the inside.   He reports that Google will sometime actually look at requests for removal of search results, and reject them when they go too far, and that Google is including copyright takedown requests in its effort to be clear with the public about the extent to which various copyright holders are using -- and perhaps abusing -- the system.

Still sorry that Fred is no longer at EFF, but this is good stuff.

Boilermakers President Newton B Jones -- Maybe Not a "Monarch," but Certainly Litigious

by Paul Alan Levy

For more than twenty years, before a few Internet free speech cases wandered across my desk and led me into my current area of specialization, I spent most of my time at Public Citizen representing rank-and-file union members in litigation over their right to campaign for change within their unions, and their rights vis-a-vis management given the fact that managers often try to rid themselves of workers who rock the boat about complaisant union leaders.  So it was with special pleasure that I seized the opportunity to represent a Boilermaker who has been sued for creating a Facebook page that pillories Newton B. Jones, the president of the “international” union (reflecting that the union has a handful of locals in Canada).

The Facebook page, entitled “Lord Newton B. Jones, Monarch,” includes such lines as “Hi, I’m Newt, my daddy gave me a dynasty” (the father of Newton B. Jones was union president before him, and there are several younger Joneses on the payroll), and lists his fairly large annual compensation figures with the sardonic comment “Solidarity! Whatever. The union makes me rich!”).  Regrettably the page was taken off line as part of Jones’ legal offensive against the criticism (does Facebook not allow parody pages?), so I cannot link to it directly.