Consumer Law & Policy Blog

More on the effort to restore lower student-loan interest rate

Following up on Brian's post early this morning about a failed Senate bill that would have rolled back the student-loan interest rate that doubled earlier this month: CNN is reporting that a "bipartisan groups of senators have reached a tentative deal to help students facing the doubled interest rate."

Wal-Mart vs. living-wage legislation

Wal-Mart has been thinking about putting at least three large stores in the District of Columbia and had spent a chunk of money in the planning phase. Meanwhile, the D.C. City Council has been considering minimum-wage legislation that would require certain large retailers, including Wal-Mart, to pay its workers at least $12.50 per hour (or 50% greater than the base minimum wage now applicable to all employers subject to the District's minimum-wage law). Wal-Mart has said that if the minimum-wage proposal became law it would pull the plug on the planned stores. As explained in this article by Mike DeBonis, yesterday the D.C. Council voted 8-5 to approve the minimum-wage hike. The law could still be vetoed by D.C. mayor Vincent Gary and must pass through a congressional review period before it becomes effective.

Fourth Edition of Our Casebook Now Available

by Jeff Sovern

This is completely self-serving, but law professor readers of this blog may be interested to learn that the fourth edition of our casebook, Consumer Law, Cases and Materials, Fourth Edition is now available.  As I said in April, our goal was to continue comprehensive coverage of core consumer law subjects (like deceptive advertising, Truth in Lending, bait and switch, credit reporting and discrimination, credit card laws, lemon laws and other warranty rules, debt collection, and enforcement) while also updating the book to reflect new developments in the dynamic field of consumer law, including:  

• Internet marketing and social networks, such as Facebook

• The consumer protection issues that contributed to the subprime mortgage foreclosure crisis, as well as the legal fallout from that crisis, including the new Consumer Financial Protection Bureau  

• The Credit CARD Act of 2009 

• Online marketing and tracking as well as other privacy issues 

• Emerging payment systems – e.g., credit, debit and stored value cards  

• The latest U.S. Supreme Court developments on consumer arbitration  

• Predatory lending 

• Ad substantiation, celebrity and other testimonials 

• The debt buying industry and debt collection practices employed in that industry.

We added a new co-author, Chris Peterson of Utah and currently at the Consumer Financial Protection Bureau, to our lineup of Andy Spanogle of GW, Ralph Rohner of Catholic, and Dee Pridgen of Wyoming. Chris is known for scholarship on predatory lending, among other things, and he revitalized the predatory lending chapter, and made other significant contributions.  As in past editions, this text contains a balance of cases, problems that reflect modern situations, and notes with discussion questions and references to the latest consumer protection scholarship, including behavioral economic research that sheds light on how consumers actually behave. The updated teacher's manual and a new edition of Selected Consumer Statutes should be out shortly. I am quite excited about this new volume and I am confident that when people see it, they will share that excitement. 

Effort to bring back low student-loan rates fails in the Senate

We reported earlier that the interest rate for new federal student loans doubled from 3.4% to 6.8% on July 1 because Congress failed to agree on new legislation. The Senate tried again yesterday, but again failed. A bill sponsored by Senate Democrats would have brought the rate back down to 3.4% for one year, retroactive to July 1. The bill had more "yes" votes than "no" votes, by 51-49, but that was far short of the 60 votes needed for the bill to advance. Getting 60 votes on any bill that would fix the rate at 3.4% seems unlikely because three Senate Democrats now favor a bi-partisan proposal that would allow loan rates to float, along with rates on 10-year Treasury bonds. Read more in this article by Chris Good.

Dazzling Times Op-Ed: To Catch a Creditor

Here. 

Do graphic tobacco warnings affect consumers' perceptions of taste?

My colleagues Greg Beck and Brian Wolfman have blogged here several times about the fight over the FDA's graphic cigarette warnings, which were invalidated by the D.C. Circuit on First Amendment grounds.  Other countries, however, are continuing to require graphic warnings. And now from Australia comes the fascinating news that the new graphic warnings there may already be changing consumers' perceptions of the way cigarettes taste:

Almost six months have passed since Australia imposed one of the world’s toughest laws for cigarette warning labels, swapping iconic packaging for graphic images of mouth ulcers, cancerous lungs and gangrenous limbs.

And though experts say it is too soon to know what impact the law has had on tobacco use, one thing is certain: Smokers think the cigarettes taste off. Complaints started to roll in about the flavor of cigarette brands almost immediately after the law went into effect on Dec. 1. That could mean a lot for health advocates’ efforts to prevent smoking.

“Of course there was no reformulation of the product,” the Australian health minister, Tanya Plibersek, said in an interview. “It was just that people being confronted with the ugly packaging made the psychological leap to disgusting taste.”

Constitutional attacks on Dodd-Frank

The Dodd-Frank financial reform legislation remains under assault in the Republican controlled House of Representatives. At a hearing yesterday before the House Financial Services Committee's subcommittee on Oversight and Investigations, law professor Thomas Merrill and lawyer C. Boyden Gray testified that certain aspects of Dodd-Frank are likely unconstitutional. Merrill's testimony is here and Gray's testimony is here. Here is an excerpt from the subcommittee's press release:

A panel of constitutional scholars testified at the subcommittee hearing today, highlighting the constitutional deficiencies and legal uncertainties of Dodd-Frank. “It is no mere coincidence that Dodd-Frank both entrenches the Too Big to Fail problem and violates the Constitution’s system of checks and balances,” said C. Boyden Gray, a former White House Counsel and Ambassador to the European Union who is now a founding partner in a law firm.   “By giving regulators effectively unlimited power, and by removing the checks and balances that ordinarily prevent the abuse of power, Dodd-Frank fosters the very conditions that give rise to Too Big to Fail.” Thomas W. Merrill, a professor at Columbia Law School, said in his testimony that Dodd-Frank raises “serious constitutional questions” and may violate, among other provisions, the Due Process Clause, Article III, the First Amendment, and the Bankruptcy Clause.  “Dodd-Frank says you can be sent to jail for up to five years for disclosing the truth about a civil case brought against you by the government.”

 

Federal judge holds that Apple violated antitrust laws by conspiring with major publishers to raise the price of ebooks

The case was brought by our own U.S. Department of Justice. Read about it here.

Fisher Study of Stalled Foreclosures

Linda Fisher of Seton Hall has written Shadowed by the Shadow Inventory: A Newark, New Jersey Case Study of Stalled Foreclosures & Their Consequences, forthcoming in the UC Irvine Law Review.  Here's the abstract:

Foreclosure activity has declined recently in some areas, but a number of states, such as Florida, New Jersey, and Illinois, showed increases in 2012. The national inventory of homes in foreclosure or owned by banks climbed nine percent to 1.5 million homes. Although investors are now buying foreclosed properties in certain markets, driving down inventory and contributing to an upswing in housing prices, lower-income neighborhoods generally have not enjoyed these effects. These include many of the African-American and Latino neighborhoods that bore the brunt of predatory and subprime lending.  There, lenders have failed to complete foreclosures or maintain and market their REO (real-estate owned) properties, contributing to the shadow inventory that continues to depress local housing markets.

This empirical project tests the extent to which bank stalling has contributed to foreclosure delays and property vacancies in Newark, New Jersey. Previous studies conducted by the U.S. General Accounting Office, as well as by researchers at the Federal Reserve, and in Cleveland and Chicago, uncovered considerable evidence of stalled or abandoned foreclosures. Several of the studies found that abandoned foreclosures correlated positively with property vacancies. This is the first study to trace the disposition of each property in the sample through both public and private sources, allowing highly accurate conclusions to be drawn. I reach a similar conclusion to the previous studies with respect to stalling: without legal excuse or ongoing workout efforts, banks frequently cease prosecuting foreclosures. The stalled foreclosures in my study, however, do not strongly correlate with property vacancies, but a high percentage of REO properties are vacant. This study is small in scale, involving a random sample of 100 foreclosures filed between 2007 and the first half of 2009 in a single neighborhood, but the results can be extrapolated to the City of Newark, and, to some extent, similar lower-income urban neighborhoods in Northeastern states with judicial foreclosure regimes. The national banks that securitized mortgages during the housing boom followed standard practices of targeting communities of color for the worst subprime loans. They also followed national servicing and foreclosure practices adapted to each state’s laws.

More on Debt Collection: CFPB To Go After Banks' Collection Practices

Suddenly, there's a lot going on the in the world of debt collection regulation. On the heels of yesterday's announcement by the FTC of a huge debt-collection settlement (discussed in the post below), the CFPB is announcing today that it will use its UDAAP authority to regulate the collection practices of banks. “It doesn’t matter who is collecting the debt — unfair, deceptive or abusive practices are illegal,” says CFPB director Richard Cordray in a statement. And the OCC, too, is investigating how JP Morgan and other banks collect credit card debt. Jessica Silver-Greenberg and Ed Wyatt have a story in today's TImes that takes a broad look at the developments at all three agencies.

The CFPB published two bulletins on debt collection today. The first makes clear that any entity subject to the Bureau's jurisdiction under the Dodd-Frank Act, whether a third-party collector or a creditor collecting its own debts, can be held accountable for any unfair, deceptive, or abusive practices in collecting a consumer’s debts. The second warns companies to avoid deceptive statements concerning the impact of paying a debt on a consumer’s credit score, credit report, or creditworthiness.