Consumer Law & Policy Blog

FTC: It's Illegal to Collect A Debt by Threatening That the Debtors Will Lose Their Kids if They Don't Pay Up

by Brian Wolfman

It's nice to see the FTC shutting down unscrupulous, outrageous debt collectors. In this complaint filed last month, the FTC charged a debt collection company called Goldman Schwartz and related defendants with a variety of violations of the Fair Debt Collection Practices Act and the Federal Trade Commission Act. As explained in the agency's press release, two weeks after the filing of the complaint, the district court shut down the debt collection operation. The FTC claimed, among other things, that Goldman Schwartz had told "a Virginia woman that she would be arrested and jailed for three years, and would lose her disability payments if she did not pay a $980 debt." The FTC also says that the company told alleged debtors that they would lose custody of their children if they did not pay up.

Here is the district court's preliminary injunction, which, in addition to closing down the business, banned the defendants (including the principals of Goldman Schwartz) from engaging in debt collection and froze the company's assets.

An FTC action like this one protects the consumers who would otherwise be harmed in the future by the defendants. A broader question is whether this type of action deters others from engaging in the same or similar illegal behavior. The FTC apprently thinks so and sees the Goldman Schwartz action as part of "its continuing crackdown on scams that target consumers in financial distress." Go here for details on the FTC's crackdown.

Full Court Rebuffs Recess-Appointments Challenge

On Monday, we told you about one company's efforts to bring its challenge to President Obama's recess appointments before the U.S. Supreme Court. The challenge came in the form of an emergency stay application directed to Justice Ginsburg, which she wasted no time in denying. The challenger -- a company, known as HealthBridge Management, that is mired in an ugly labor dispute -- immediately redirected its request to Justice Scalia, who in turn referred it to the full Court. Today, the full Court issued a brief order denying the request. (Justice Alito's sister is one of the lawyers for the company, so he recused himself.)  SCOTUSblog has more details here.

Should Used Car Sellers Have to Fix Recalled Cars Before They Are Resold? Should Rental Car Companies Have to Fix Recalled Cars Before They Rent Them to Consumers?

by Brian Wolfman

California legislators are considering requiring used car sellers to fix cars subject to government safety recalls before they re-sell those cars to unsuspecting customers. The idea is that consumers should not be buying used cars that the government says have bad brakes or faulty, fire-prone wiring. Legislation on the topic could affect a lot of cars. As The Consumerist's Chris Morran explains, "[a]ccording to a 2011 survey, there were 2.7 million used vehicles available for purchase that had at least one un-repaired safety recall."

You might take a caveat emptor approach, and make consumers thinking about buying a used car do their own homework, which is made easier by the availabilty of the federal government's vehicle and safety complaint database. But there will still be many unsuspecting consumers out there, and legislators might rightly be concerned with their safety and the safety of their families. Moreover, many vehicle safety issues -- faulty brakes, for instance -- implicate the safety of people in other vehicles. And, finally, notice to the immediate prospective buyer is not the only issue. If the cars are not fixed, someone, somewhere, at some point is likely to buy a used car that is subject to a safety recall.

It seems like an easy call to say that rental car companies should not be able to rent cars that are subject to government safety recalls and have not been fixed. Senator Barbara Boxer sponsored legislation to prohibit those rentals, but it appears to have died. But the proposed legislation apparently prompted five of the major car rental companies to agree on their own not to rent unfixed, recalled cars.

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Ed Mierzwinski: Senators Hold CFPB Director Hostage, Roil Markets

Here.  This should be read by anyone interested in consumer protection. 

Fordham Law Conference to Include Consumer Law Panel

The conference is titled ""What is Urban Law Today?  A Symposium on the Field’s Past, Present, and Future in Honor of the Urban Law Journal’s 40th Anniversary.  It will be be held on February 28, 2013 at Fordham’s Lincoln Center Campus.  The consumer law panel, on consumer protection by local governments, is scheduled for 2:10pm-3:00pm. Speakers include Kathleen Morris of Golden Gate and Paul Diller of Willamette.  Susan Block-Lieb of Fordham will moderate.  More information here."

Are Federal Computer-Crime Laws Outdated?

Michael Hiltzik at the LA Times thinks so. Read his column "Congress's horse-and-buggy computer laws" to find out why he says federal computer laws aimed mainly at protecting intellectual property are hurting ordinary consumers and need to be re-thought.

More on the Republicans and the CFPB

So much is being written about Republican opposition to confirmation of the CFPB's director, Richard Cordray, that it's hard to keep up with it all.  But a couple of recent pieces pull a lot together and are worth a look. One is Nobel Laureate and Times columnist Paul Krugman's op-ed yesterday, Friends of Fraud, about how Republican attempts to kill the bureau enable fraud.  And the other, from Mike Konczal, draws on Adam Levitin's testimony to refute the most recent letter from the Republican senators.  It's titled Why the Republican CFPB Arguments Are Wrong. 

Senate bill would bar "pay-for-delay" deals between brand-name and generic drug companies

We have blogged several times (here, here, here, here, and here) about the Federal Trade Commission's challenges to "pay-to-delay" settlements between brand-name and generic drug companies, in which the brand-name company pays the generic to delay selling a generic equivalent of the brand-name drug. The Legal Times reports that the new chair of the Senate's antitrust subcommittee has reintroduced today a bill to eliminate pay-off agreements to keep more affordable generic pharmaceuticals equivalents off the market.

Debt Buyer's Guide: Small Claims Court is "the Vehicle That Flushes Out Payment"

Not that I want to generate sales of the book, but here is an ad for a guide for debt buyers that contains the statement above  (HT: Gina Calabrese).  

More Recess-Appointment Fallout: Republicans Introduce Bills to Freeze Work at the NLRB and the CFPB

As Todd Ruger explains in this National Law Journal article, "Senate Republicans are looking to stop work at the National Labor Relations Board and the Consumer Financial Protection Bureau, piggybacking on a federal appeals court ruling that invalidated some of President Barack Obama's controversial recess appointments."