Consumer Law & Policy Blog

The "retirement crisis" and some eye-opening data about Americans' savings

The main point of this Washington Post column is to describe the looming danger facing retirees with insufficient savings, and to suggest one possible answer (a supplement to Social Security). But I found the column most interesting for its discussion of savings rates among even Americans living above the median income (spoiler alert: they're alarmingly low). Another interesting tidbit:

A 2011 study found that half of American families couldn’t put their hands on $2000 within 30 days if an emergency struck. As the authors wrote, that $2000 amount “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair.”

Helps explain how easily people fall into debt, and why consumer protection laws are so important to so many people.

FTC and CFPB to Host Joint Roundtable on the "Life of a Debt"

On June 6, the FTC and the CFPB will co-host a joint roundtable event, "Life of a Debt: Data Integrity in Debt Collection," to examine the flow of consumer data throughout the debt collection process. The event, held at the FTC, will bring together consumer advocates, credit issuers, collection industry members, state and federal regulators, and academics to exchange information on a range of issues. Topics will include:

• the amount of documentation and other information currently available to different types of collectors and at different points in the debt collection process;
• the information needed to verify and substantiate debts;
• the costs and benefits of providing consumers with additional disclosures about their debts and debt-related rights; and
•  information issues relating to pleading and judgment in debt collection litigation.

The roundtable is free and open to the public; it will be held at the FTC’s Satellite Building Conference Center, 601 New Jersey Avenue, NW, Washington, D.C. and will also be streamed live online. An RSVP is suggested as space is limited. 

For more information, including the agenda, go here.

Arbitration Fairness Act Reintroduced Today in Congress

by Deepak Gupta

The Arbitration Fairness Act of 2013 -- legislation that would ban mandatory pre-dispute binding arbitration in consumer and employment contracts -- was introduced today in both houses of Congress by Senator Al Franken (D-Minn.) and Rep. Hank Johnson (D-Ga.). New to this version of the bill--an exclusion for antitrust disputes.

The House bill (H.R. 1844) has 22 original cosponsors; the Senate bill (S. 878) has 17 original cosponsors. The legislation's proponents hope to use the bill as a catalyst for movement on arbitration in a number of areas -- including hearings, expanded coalition building, continued media attention, as well as supporting action at the CFPB and the SEC and through additional future legislation.

Here's a letter of support from a broad coalition of supporters, including the AFL-CIO, American Association for Justice, American Civil Liberties Union, Consumer Federation of America, Consumers Union, NAACP, National Association of Consumer Advocates, Public Citizen, and U.S. PIRG, among others.

Learn more: Take Justice Back, Fair Arbitration Now.

CFPB goes after two lawyers in alleged debt relief scam

The Blog of the Legal Times reports that

The Consumer Financial Protection Bureau today filed suit against two lawyers and two debt relief companies, alleging they charged thousands of consumers illegal advance fees and left some worse off financially. One of the lawyers, Michael Levitis, also faces face mail and wire fraud charges brought by the Manhattan U.S. Attorney’s office -- the first-ever criminal charges stemming from a CFPB referral. * * * What’s notable is that the complaint describes the acts as both deceptive and unfair, but omits the statute’s third element, abusive. While unfair and deceptive are familiar terms in consumer protection law, the term “abusive” is new to Dodd-Frank. Among Republicans in Congress, it’s been the subject of much consternation. At a hearing last year, for example, U.S. Rep. Sean Duffy (R-Wis.) called it "a subjective standard with no bright line.” The CFPB wants the court to force the defendants to disgorge their ill-gotten profits, award restitution to consumers and impose other civil money penalties.

"The Practice: Class Action Cacophony at the Supreme Court"

That's the name of this short essay by law professor Linda Mullenix on the Supreme Court's recent class-actions decisions in the Amgen, Comcast, and Standard Fire decisions. Here is the abstract:

The article surveys the Court’s liberal and conservative divide on class certification issues, giving some support to both the plaintiff and defense sides of the class action docket. In Amgen, in an opinion by Justice Ginsburg, a divided Court again saved the fraud on the market presumption for certification of securities class actions. On the other hand, in Comcast, in an opinion authored by Justice Scalia, an equally divided Court found fatal to class certification the failure of proof of classwide damages for a Rule 23(b)(3) damage action. The Comcast decision, coupled with a concurrence by Justice Alito, suggests that there may be at least four votes for the Court to consider the original fraud on the market presumption announced in the landmark case, Basic v. Levinson. Although embodying different outcomes, the Amgen and Comcast decisions both embrace the same litany of core class certification principles. However, the Court in neither case has clarified or illuminated further the debate over the extent to which trial courts may properly assess the underlying merits of class claims as part of the certification process. Instead, the Court in both cases deflected the merits conversation into the Rule 23 predominance requirement. Finally, in Standard Fire Ins. Co. v. Knowles, in an opinion by Justice Breyer, a unanimous Court agreed that a class representative could not stipulate to less than the $5 million damage threshold in order to evade removal under the Class Action Fairness Act of 2005. A class representative could bind himself, but had no power or authority to bind absent class members.

FDA proposes to ramp up regulation of tanning beds

by Brian Wolfman

Yesterday, the Food and Drug Administration issued this proposed order regarding tanning beds. The FDA is proposing to reclassify these ultra violet devices to require more warnings -- including that minors not use them at all -- because they are a cancer hazard. The proposal would also require the products to meet certain perfomance standards. Basically, the problem is that hanging out in tanning beds causes melanoma, an often fatal form of skin cancer. Tanning devices can also cause skin burns.

One ramification of the FDA's order (if finalized) is that manufacturers would be required to submit their tanning devices for pre-market review. The FDA would then review the product to determine whether it meets the warning requirements and various performance specifications outlined in the proposed order. (Under current law, tanning devices are exempt from any pre-market scrutiny.)

Here is an excerpt from the FDA's press release:

[T]he U.S. Food and Drug Administration issued a proposed order that, if finalized, would reclassify sunlamp products and require labeling to include a recommendation designed to warn young people not to use these devices. According to the American Academy of Dermatology, there is a 75 percent increase in the risk of melanoma, the deadliest type of skin cancer, in those who have been exposed to ultraviolet radiation from indoor tanning, and the risk increases with each use. The proposed order does not prohibit the use of sunlamp products by those under the age of 18, but it provides a warning on the consequences. The order would reclassify sunlamp products from a low risk device (class I) to a moderate risk device (class II). “Using indoor tanning beds can damage your skin and increase your risk of developing skin cancer,” said FDA Commissioner Margaret A. Hamburg, M.D. “The FDA’s proposed changes will help address some of the risks associated with sunlamp products and provide consumers with clear and consistent information.” If the order is finalized, manufacturers would have to submit a pre-market notification (510(k)) to the FDA for these devices, which are currently exempt from any pre-market review. Manufacturers would have to show that their products have met certain performance testing requirements, address certain product design characteristics and provide comprehensive labeling that presents consumers with clear information on the risks of use. The order proposes to include a contraindication against use on people under 18 years old, and the labeling would have to include a warning that frequent users of sunlamp products should be regularly screened for skin cancer. The FDA will take comments on the proposed order for 90 days.

Brady Dennis has written this Washington Post story on the FDA proposal.

"Broken Circuit: Obstructionism in the Environment’s Most Important Court"

That's the name of this article by Si Lazarus and Doug Kendall of the Constitutional Accountability Center. "Broken circuit" is Lazarus and Kendall's characterization of the U.S. Court of Appeals for the D.C. Circuit. They point to "[a] new breed of activism on the .. the D.C. Circuit — for environmental cases second in importance only to the Supreme Court and the central venue for high-profile lawsuits — [that] threatens decades of progress."

Study Finds Payday Loans Cost Economy $774 Million in 2011

Here.  The report is by the Insight Center for Community Economic Development. It estimates the loans cost more than 14,000 jobs.

Ben-Shahar Reviews Boilerplate

Omri Ben-Shahar of Chicago has written Regulation Through Boilerplate: An Apologia, forthcoming in the Michigan Law Review. Here's the abstract:

 

This essay reviews Margaret Jane Radin’s Boilerplate: The Fine Print, Vanishing Rights, And The Rule Of Law (Princeton Press, 2013). It responds to two of the book’s principal complaints against boilerplate consumer contracts: that they modify people’s rights without true agreement to, or even minimal knowledge of, their terms; and that the provisions they unilaterally enact are substantively intolerable. I argue, counter-intuitively, that contracts with long fine prints are no more complex and baffling to consumers than any alternative boilerplate-free templates of contracting. Therefore, there is no alternative universe in which consumers enter simpler contracts better informed of the legal terms. In addition, I argue that any policy that mandates consumer-friendlier arrangements (such as ones that eliminate boilerplate arbitration clauses, warranty disclaimers, or data collection) would hurt consumers in an unintended but potentially costly way.

The legacy of the Supreme Court's Concepcion decision

Read this post by Paul Bland, which contains a example of how the Supreme Court's decision in AT&T v. Concepcion is keeping consumers out of court and without any remedy. Here's Paul's synopsis:

In Betts v. McKenzie Check Cashing, after a two-day evidentiary hearing that was essentially a trial of the payday lender’s arbitration clause, the trial court found as a matter of proof that McKenzie’s class action ban would prevent consumers from holding the lender accountable under the state’s consumer protection laws. Notwithstanding the obvious injustice, after the U.S. Supreme Court’s decision in Concepcion, the Florida Supreme Court held that it had no choice but to overturn the lower courts and enforce the arbitration clause.  The Florida Supreme Court held that federal law requires the enforcement of class action bans even when they are proven to gut state consumer protection laws.