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    Public Citizen Litigation Group
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    St. John's University School of Law
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    Public Citizen Litigation Group
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    National Association of Consumer Advocates
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    National Consumer Law Center

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« June 2013 | Main | August 2013 »

Wednesday, July 31, 2013

Major ruling invalidating a Federal Reserve Board rule on debit card swipe fees

Go here to see the decision of Judge Richard Leon of the U.S. district court in D.C. Here's the first paragraph of the lengthy ruling:

Plaintiffs NACS (formerly, the National Association of Convenience Stores), National Retail Federation ("NRF"), Food Marketing Institute ("FMI"), Miller Oil Co., Inc. ("Miller"), Boscov's Department Store, LLC ("Boscov's) and National Restaurant Association ("NRA") (collectively, "plaintiffs") bring this action against the Board of Governors of the Federal Reserve System ("defendant" or "the Board") to overturn the Board's Final Rule setting standards for debit card interchange transaction fees ("interchange fees") and network exclusivity prohibitions. Before the Court are the parties' cross-motions for summary judgment [Dkts. ##20, 23]. Upon consideration of the pleadings, oral argument, and the entire record therein, the Court concludes that the Board has clearly disregarded Congress's statutory intent by inappropriately inflating all debit card transaction fees by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit card transaction. Accordingly, the plaintiffs' motion is GRANTED and defendant's motion is DENIED.

Posted by Brian Wolfman on Wednesday, July 31, 2013 at 02:48 PM | Permalink | Comments (0) | TrackBack (0)

World Wide Web Consortium Tracking Protection Working Group Text

Here, along with an explanatory memo.  We had previously blogged about this Do Not Track effort.  Here's the abstract:

 

This document contains the decision of the Tracking Protection Working Group of the World Wide Web Consortium, as issued in July, 2013 by the co-chairs, Peter Swire and Matthias Schunter, as well as a detailed Explanatory Memorandum for that decision.  In response to 27 comments and a large previous public record, the decision addresses the question of what base text to use for the Do Not Track Compliance Specification, and concludes that the draft put before the group in June (“June Draft”) will be the base text rather than the proposal submitted by the Digital Advertising Alliance and other group members (“DAA Proposal”).  Part I of the Explanatory Memorandum provides history and background of the process to date, with emphasis on the issues that differ between the two texts.  Part II is called “Do Not Target,” and discussing the definition of “tracking,” the means of user choice concerning targeted online advertising, and related topics.  Part III is called “Do Not Collect,” and addresses issues including minimization of data collection and the use of unique identifiers.  Part IV is called “Data Hygiene.”  It examines a range of controls that a company may apply to de-identify data and reduce the risk that data is revealed without authorization.  Parts II to IV include discussion of many of the comments submitted under the July 12, 2013 deadline concerning which base text to adopt.  Part V addresses additional comments submitted, responding especially to comments that supported the DAA Proposal to become the base text.

Posted by Jeff Sovern on Wednesday, July 31, 2013 at 12:50 PM in Privacy | Permalink | Comments (0) | TrackBack (0)

Times Report: Over a Million Are Denied Bank Accounts for Past Errors

Here.  The story is about consumer reports maintained on consumers' banking practices originally intended to bar fraud but that often result in banks denying accounts to low-income consumers because of bounced checks and similar blemishes. 

 

Posted by Jeff Sovern on Wednesday, July 31, 2013 at 12:45 PM in Credit Reporting & Discrimination | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 30, 2013

Paper Explains and Critiques the Account Stated Cause of Action

International & Comparative Law Fellow Emanwel J. Turnbull at Maryland has written Account Stated Resurrected: The Fiction of Implied Assent in Consumer Debt Collection.  Here's the abstract:

When are modern American consumers like 17th century merchants? The answer is “now”. Often, in collection lawsuits, creditors allege that consumers in debt are liable for an “account stated.” This “account stated” is a theory of liability that dates back to the medieval period. Today it is used precisely because it offers to treat consumers in debt like Renaissance merchants. The core rule of an account stated claim today is that if a debtor receives a statement of what he owes and he does not object to the statement, he is assumed to have agreed that the statement is correct and to have promised to pay the debt. This rule began as a custom between merchants in the 17th century. It became part of English law and was received into American law with the rest of English common law. The rule, which I will call “implied account stated”, was extended to non-merchants in the United States in the 19th century. In the 20th century, account stated began to fall into obscurity.

Surprisingly, account stated has been resurrected in recent years by debt-collectors, for the purpose of collecting consumer debt. Today, the primary function of account stated is to reduce the evidence plaintiffs must provide to obtain a judgment. Implied account stated, at its worst, requires no more than evidence that the plaintiff sent the debtor a bill and the debtor failed to object to the bill. Account stated is particularly attractive to businesses which purchase defaulted consumer debts: “debt buyers” because it allows them to collect with little evidence in hand.

This article will trace the history of account stated, from its medieval origins to the implication of accounts stated from the trade practices of merchants in the 17th and 18th centuries, and extension of implied account stated from merchants, to any person with legal capacity. Analysis of the current position of account stated claims in New York, Maryland and West Virginia will follow, showing how New York has accepted the extension, Maryland has no definitive case and West Virginia explicitly rejected the extension.

After establishing the history and current use of account stated, this article will argue for reform, on grounds of both policy and principle. Account stated is generally justified as a consensual relationship. Yet the implication of account stated violates one of the simplest rules of contract law: that silence does not amount to assent. Thus the consensual nature of account stated in modern consumer collection actions is no more than a legal fiction. To consumers, it is merely a harsh and archaic technicality, which allows collection actions to proceed on scant evidence.

These problems call for a change to account stated doctrine. I argue that account stated must be brought back to conformity with the normal principles of contract law. Account stated should be implied only where there is evidence sufficient to imply, as a matter of fact, that real assent was given by the consumer. Significantly, these changes would remove a theoretical inconsistency from the law. More importantly, they would prevent the abuse of account stated as a vehicle for collection when the plaintiff cannot or will not present adequate evidence to succeed upon a breach of contract claim. By narrowing account stated, whether it is through regulation or through judicial rediscovery of its origins and its relationship to ordinary contract law, consumers can be further protected, courts can be relieved of the burden of grappling with this ancient cause of action and the broken collection system, at least in one aspect, can be mended.

Posted by Jeff Sovern on Tuesday, July 30, 2013 at 05:37 PM in Consumer History, Consumer Law Scholarship, Debt Collection | Permalink | Comments (0) | TrackBack (0)

Trial court's order striking down NYC's ban on large-sized sugary drinks affirmed by NY intermediate appeals court; Mayor Bloomberg promises further appeal

Go here and here.

Posted by Brian Wolfman on Tuesday, July 30, 2013 at 04:09 PM | Permalink | Comments (0) | TrackBack (0)

Richmond, CA May Use Eminent Domain to Prevent Foreclosures

The New York Times reports today that the City of Richmond, California is considering using eminent domain to buy mortgages and reduce homeowner debt. The banks don't like the idea.

The article explains:

[R]oughly half of all homeowners with mortgages in Richmond are underwater, meaning they owe more — in some cases three or four times as much more — than their home is currently worth. On Monday, the city sent a round of letters to the owners and servicers of the loans, offering to buy 626 underwater loans. ...

The city is offering to buy the loans at what it considers the fair market value. In a hypothetical example, a home mortgaged for $400,000 is now worth $200,000. The city plans to buy the loan for $160,000, or about 80 percent of the value of the home, a discount that factors in the risk of default.

Then, the city would write down the debt to $190,000 and allow the homeowner to refinance at the new amount, probably through a government program. The $30,000 difference goes to the city, the investors who put up the money to buy the loan, closing costs and M.R.P. The homeowner would go from owing twice what the home is worth to having $10,000 in equity.

 

Posted by Allison Zieve on Tuesday, July 30, 2013 at 03:57 PM | Permalink | Comments (0) | TrackBack (0)

Monday, July 29, 2013

Will Supreme Court pro-business libertarianism bring down health and safety laws, education programs, and consumer protection?

In this New Republic essay, lawyer Si Lazarus explains that "radical libertarian anti-government ideas" previously "confined to law reviews" "could readily be ratcheted up [in coming Supreme Court terms] to forge a new constitutional regime inimical to modern economic protection."

Posted by Brian Wolfman on Monday, July 29, 2013 at 09:08 PM | Permalink | Comments (1) | TrackBack (0)

Credit Report Accuracy

by Jeff Sovern

A couple of weeks ago, Ira Rheingold and I had an op-ed in the Times about issues with credit reports.  Almost on cue, the Associated Press reports Jury awards Oregon woman $18.6M over credit report.  It seems she had been trying to get Equifax to correct errors for two years. 

In the op-ed, we mentioned some of the changes we would like to see, including that Congress should require "greater accuracy from credit bureaus. . . ."  At present, under 15 U.S.C. § 1681e(b), credit reporting agencies are required "to follow reasonable procedures to assure maximum possible accuracy . . . ."  I would like to see Congress raise that to  “best procedures to assure maximum possible accuracy.” Courts have been too willing to excuse errors in credit reports by finding the credit bureau procedures that caused them or failed to prevent them reasonable.  For example, in Sarver v. Experian Information Solutions, 390 F.3d 969 (7th Cir, 2004), a credit bureau erroneously reported that some of the consumer's accounts had been involved in bankruptcy even though the consumer's other accounts did not carry that notation.  The court found that it was reasonable for the credit bureau not to have picked up the discrepancy between the different accounts.  The court also found it reasonable for the bureau not to know what's in its files or that its files contained inconsistencies, given that the credit bureau receives over 50 million updates a day.  I am told that credit bureaus have software that flags some anomalies, such as apparent attempts by children to take out car loans; surely it would be possible to create similar software to pick up anomolies of the sort in Sarver.  I think credit bureaus should be obliged to use such software, but I fear that decisions like Sarver, based on the old standard, reduces their incentive to incur the cost of the software.  By contrast, a standard that obliged credit bureaus to use best efforts would cure that problem, and by increasing report accuracy, help both consumers and lenders.

Posted by Jeff Sovern on Monday, July 29, 2013 at 08:12 PM in Consumer Litigation, Credit Reporting & Discrimination | Permalink | Comments (0) | TrackBack (0)

Lifetime poverty risk in the U.S. is increasing

Economic recovery? AP reporter Hope Yen has issued this report, based on data sometimes overlooked by the government, which maintains that the likelihood that someone in the U.S. will live in poverty in his or her lifetime is on the rise. Some excerpts:

Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream. Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor, and the loss of good-paying manufacturing jobs as reasons for the trend. * * *

While racial and ethnic minorities are more likely to live in poverty, race disparities in the poverty rate have narrowed substantially since the 1970s, census data show. Economic insecurity among whites also is more pervasive than is shown in the government's poverty data, engulfing more than 76 percent of white adults by the time they turn 60, according to a new economic gauge being published next year by the Oxford University Press.* * * Sometimes termed "the invisible poor" by demographers, lower-income whites generally are dispersed in suburbs as well as small rural towns, where more than 60 percent of the poor are white. Concentrated in Appalachia in the East, they are numerous in the industrial Midwest and spread across America's heartland, from Missouri, Arkansas and Oklahoma up through the Great Plains. Buchanan County, in southwest Virginia, is among the nation's most destitute based on median income, with poverty hovering at 24 percent. The county is mostly white, as are 99 percent of its poor. * * *

Census figures provide an official measure of poverty, but they're only a temporary snapshot that doesn't capture the makeup of those who cycle in and out of poverty at different points in their lives. They may be suburbanites, for example, or the working poor or the laid off. In 2011 that snapshot showed 12.6 percent of adults in their prime working-age years of 25-60 lived in poverty. But measured in terms of a person's lifetime risk, a much higher number — 4 in 10 adults — falls into poverty for at least a year of their lives. The risks of poverty also have been increasing in recent decades, particularly among people ages 35-55, coinciding with widening income inequality. For instance, people ages 35-45 had a 17 percent risk of encountering poverty during the 1969-1989 time period; that risk increased to 23 percent during the 1989-2009 period. For those ages 45-55, the risk of poverty jumped from 11.8 percent to 17.7 percent.

 For some of our earlier coverage on widening wealth inequality in the U.S., go  here, here, here, here, and here. 8530576430_1efcd49f26

Posted by Brian Wolfman on Monday, July 29, 2013 at 10:13 AM | Permalink | Comments (0) | TrackBack (0)

Friday, July 26, 2013

Apellate victory for Affordable Care Act mandate that employers cover birth control

The introductory paragraphs of the Third Circuit's opinion in Conestoga Wood Specialties Corp. v. HHS sum it up: A Mennonite-owned wood-manufacturing business and the family that owns it

allege that regulations promulgated by the Department of Health and Human Services, which require group health plans and health insurance issuers to provide coverage for contraceptives, violate the Religious Freedom Restoration Act, 42 U.S.C. § 2000bb, and the Free Exercise Clause of the First Amendment of the United States Constitution. . . . Before we can even reach the merits of the First Amendment and RFRA claims, we must consider a threshold issue: whether a for-profit, secular corporation is able to engage in religious exercise under the Free Exercise Clause of the First Amendment and the RFRA. As we conclude that forprofit, secular corporations cannot engage in religious exercise, we will affirm the order of the District Court.

The 2-1 opinion contains a footnote noting that "the Court of Appeals for the Tenth Circuit, in an eight judge en banc panel, in six separate opinions, recently held that for-profit, secular corporations can assert RFRA and free exercise claims in some circumstances. See Hobby Lobby Stores, Inc. v. Sebelius, No. 12-6294, 2013 WL 3216103 (10th Cir. June 27, 2013)." The majority distinguishes the Supreme Court's decision in Citizens United, explaining that, in contrast to speech, religion is not something that courts have historically found corporations (at least non-church corporations) to be capable of exercising.

Worth keeping an eye on this case; the Supreme Court might want the last word.

Posted by Scott Michelman on Friday, July 26, 2013 at 04:51 PM | Permalink | Comments (0) | TrackBack (0)

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