Consumer Law & Policy Blog

Who is Responsible for the Length of Checking Account Disclosures?

by Jeff Sovern

A recent report by the Pew Charitable Trust, Still Risky: An Update on the Safety and Transparency of Checking Accounts, found that the median length of bank checking account disclosures among the banks included within the study ran 69 pages.  The response by Consumer Bankers Association president Richard Hunt in this MSNBC report: "We don't like it."  In answer to the question of why bank disclosures are so long, he said "We have to.  All the regulations passed by Congress and regulators force us to do so." But according to the report, credit union checking account disclosures are less than half the length of bank checking account disclosures (though they are still longer than desirable at a median of 31 pages), and one bank's disclosures spanned 21 pages. 

The median number of bank fees was 26; some banks had 48 fees.  By contrast, no credit union examined charged more than 29 fees.  Can federal regulators be blamed for the number of fees banks choose to charge?  And just what are these fees, anyway?  According to page 45 of the report, among the fees disclosed were fees for

“empty envelope,“ “bad address,” “online images and photocopy requests: self-service through online banking,” “domestic wire transfer email notification,” “coins deposited (large amount),” “rejected offline ATM transactions,” and “customer service representative assisted transfer.”

 Is it Congress's fault when a bank chooses to charge a  fee for sending an empty emvelope or coins?  Could it be that banks are inflating the number of fees they charge in an effort to trigger information overload so that consumers don't read the disclosures? 

Obesity and Behavior Modification

At this blog, we have covered extensively the health and economic costs of the obestiy epidemic and policy efforts at fighting it. Read this article by David H. Freedman about how the behavior modification techniques of B.F. Skinner are being used (with some success) in combatting obesity.

The Federal Communications Commission to Look Again at Cell Phone Radiation Risks

The Federal Communications Commission looked at the safety risks of mobile phone radiation and set regulatory standards about 15 years ago. Since then, concerns have been raised about whether cell phone use causes brain cancer. Studies have not found a definitive link, but those studies were done when people used phones and other radiation-emitting devices less frequently than they do today. With longer and more frequent calls, the FCC wants to take another look. Read about the FCC's plans here.

Preparing for Supreme Court's Affordable Care Act Ruling

How are Congress and the President preparing for a ruling that would nix all or part of the Affordable Care Act? Read about it here.

FTC Acts Against Forensic Mortgage Loan Audit Scam

The Federal Trade Commission on Wednesday got a temporary restraining order against a group of companies that the agency alleges preyed on financially vulnerable homeowners, convincing them to pay $1,995 or more by holding out bogus promises that they could help them avoid foreclosure and renegotiate their mortgage. The TRO stops the allegedly illegal conduct, freezes the companies' assets, and appoints a receiver to run the business while the FTC moves forward with the case. According to the FTC's press release, The complaint charges the defendants with violating the FTC Act and the Mortgage Assistance Relief Services Rule, known as the MARS Rule, by, among other things, deceptively telling consumers that they could renegotiate mortgages, making payments substantially more affordable; that they could use the “forensic audits” to negotiate with lenders; and that if they failed to do these things, they would provide a refund.

Law Schools Shrinking?

A Wall Street Journal article reports that at least ten law schools are reducing the size of this year’s incoming class. My guess is that the number is actually higher. The reasons given for the reductions are generally described as the quality and size of the applicant pool and the employment situation. As the article notes, however, there is an elephant in the room—the U.S. News rankings:

Shrinking class size could help schools maintain their all-important U.S. News rankings even as the pool of applicants declines. By cutting the number of places available, a law school can be just as selective, or even more so, about prospective students' LSAT scores and undergrad grade-point averages.

         "They are trying to get a class that mirrors prior classes, but with fewer applicants and enrollees," says Indiana University's Mr. Henderson.

         The number of law graduates per year spiked to 44,495 this year from 42,673 in 2006, and the American Bar Association accredited 10 new law schools over the same period.

         But the high-paying law-firm jobs many of those students had hoped to land are in short supply, and some top firms have scaled back their hiring of entry-level lawyers by as much as half since the financial crisis started in 2008. "This is long overdue," Mr. Wu says of the class reductions. "The expectations about law school have been out of whack since I was in law school," he says, adding that he earned his law degree in 1991 and practiced at Morrison & Foerster LLP in San Francisco before entering academia.

         For the law-school class of 2011, employment rates are at an 18-year low, according to a survey by the NALP, a nonprofit educational association for the legal profession.

Look for many more schools to consider reduced class size in the future.

 

Regulatory Malfunctions Exposed

Lisa Heinzerling has written two pieces at the Georgetown Law Faculty Blog concerning regulatory failures at the Department of Justice and the Food & Drug Administration.

This essay discusses a DOJ cost-benefit analysis performed in conjunction with the issuance of a rule implementing The Prison Rape Elimination Act. Here's an excerpt:

DOJ found itself in the remarkable position of asking how much money the victims of rape would be willing to pay to avoid rape and also asking how much money these victims would be willing to accept in exchange for being raped.  In the strange logic and twisted morality of cost-benefit analysis, the victim – not the perpetrator – must be willing to pay up to avoid the crime.  If not, well, too bad for the victim. Never mind that rape is a serious crime, not a market transaction.  Never mind that framing rape as a market transaction strips it of the coercion that defines it. ***  Applying cost-benefit analysis to rape takes this already-troubled methodology to a new, and bad, frontier. The Obama Administration should ask itself whether this is the kind of legacy it hopes to deepen in a second term: a legacy that holds that any human encounter, no matter how violent and coerced, can be treated as just another day at the market.

Read the entire piece for more on this outrage.

Heinzerling's other piece tells the story of inexcusable delay in the FDA's consideration of a rule to limit the use of antibiotics in animal feed. (The failure to impose reasonable limits can lead to antibiotic resistance in humans.)

Consumer Groups Oppose Music Industry Merger Before the FTC

Two consumer groups -- the Consumer Federation of America and Public Knowledge -- have opposed the merger of two of the country's four major music recording companies, EMI and Universal Music Group, before the Federal Trade Commission. Read the groups' lengthy FTC submssion. A summary of the groups' antitrust analysis appears after the jump.

Has the Hollywood bar already forgotten about the Streisand effect?

by Paul Alan Levy

Neil Meyer, an entertainment lawyer based in Beverly Hills, recently sent an oddly frivolous cease-and-desist letter to Lipstick Alley, an occasional client of ours that runs a message board devoted to discussions about athletes and other celebrities, with a particular focus on issues of interest to African-American women.  He complained about a few postings commenting on a report about an actor named Chris Evans, apparently based on a report in a Hollywood gossip blog.  Meyer’s letter accused Lipstick Alley of “publishing” these rumors, and threatened suit to hold it liable for defamation and right of publicity violations.  And, like throwing red meat to the lions, at the same time that he was threatening suit, Meyer claimed that his threat was completely confidential and that Lipstick Alley was “specifically prohibited” from publishing or even describing the substance of his demand letter.  Readers of this blog are familiar with the folly of that sort of claim.

In a letter sent to Meyer today, I pointed out his apparent ignorance of section 230, which protects Lipstick Alley from being sued over content that its users post, as well as certain other errors in the letter (such as referring to his client using both male and female pronouns).  Given that the “Streisand effect” was named for a silly lawsuit by a Hollywood personality, you would think lawyers who practice in that community would know better.

Supreme Court Holds that Federal Employees Cannot Bring Equitable Constitutional Claims in District Court

By Leah Nicholls and Brian Wolfman

Monday, in Elgin v. Department of the Treasury, the Supreme Court held 6-3 that federal employees cannot bring equitable constitutional claims in district court. Rather, the Civil Service Reform Act (CSRA) impliedly requires that employees bring those claims before the Merit Systems Protection Board (MSPB). In Elgin, four former federal employees had sued because they were terminated when their employing agencies learned that they had failed to register with the Selective Service. They contended that the law under which they were fired is unconstitutional because it violates the equal protection component of the Due Process Clause since it applies only to men and is a Bill of Attainder.

Both sides agreed that the MSPB lacked the power to strike down a law as unconstitutional, meaning that the MSPB could not actually decide the plaintiffs’ constitutional claims. Defendants argued—and the Court agreed—that was acceptable because employees could appeal from the MSPB to the Federal Circuit, which can decide the constitutional claims. If factfinding was necessary, they reasoned, the Federal Circuit could remand to the MSPB. There are a number of arguments on the other side, not least of which is that nothing in the CSRA says anything about requiring constitutional claims to go to the MSPB—it’s quite a stretch to assume that Congress silently intended to preclude district court review in favor of sending facial constitutional claims to a forum that cannot decide them and, in any event, has no special expertise to decide them. (The MSPB is an expert tribunal that sits to hear disputes between employees and their managers; it hardly was designed to decide whether the Selective Service registration requirement is constitutional.)

The question whether the district courts are available to hear a federal employee’s constitutional challenge to a statute that imposes a lifetime ban on federal employment is not earth shattering. There are very few categorical federal employment bans such as the one at issue in Elgin. But the bigger story is the steady erosion of the ability of plaintiffs to have their constitutional challenges heard in a federal district court. After the landmark Bivens case, it seemed that the federal courts were open to plaintiffs with constitutional damages claims against federal officers. But since 1980, the Court has cut back, making Bivens the exception, not the rule, in damages actions. In subsequent cases, when a federal administrative scheme exists or state-law provides some sort of remedy (even if not the remedy sought by the plaintiff in federal court), the Court has withheld a federal forum. But even then, many observers’ assumption, based on precedents as old as Marbury, was that the federal courts would still be there to safeguard constitutional rights by providing equitable remedies. To be sure, Elgin preserves review in the Federal Circuit (and that’s good), but only after the plaintiff runs his claim through an administrative tribunal that is powerless to render the relief sought and, at least in the first instance, powerless to oversee factual discovery that may be required for meaningful appellate review.  

Disclosure: The authors of this post were counsel for the plaintiffs in the Supreme Court.