Consumer Law & Policy Blog

Bounceback, Inc. Sued for Using Seal and Letterhead of Prosecutors to Collect Debts

by Deepak Gupta

When Roz Terrill wrote a $41 check at the local Goodwill store to buy clothes for her two special-needs children, she had no idea it would lead to threats of criminal prosecution against her. Because of a banking mix-up, Roz’s check did not clear. Months later, she received a letter that looked like it had been sent by the Kitsap County Prosecuting Attorney. Bearing a prosecutor’s seal at the top, it said that Roz had been accused of a crime and, in large type, that, “to avoid the possibility of criminal charges being filed,” she had to pay the amount of the check plus $185 in fees.

What Roz didn’t realize was that the letter was really sent by Bounceback, Inc., a for-profit Missouri-based debt collection company that had paid the real prosecutor’s office for permission to threaten consumers. The real prosecutor had never reviewed any evidence about Roz’s check and was never going to prosecute her. Nor was there any legal basis for the fees. But Roz ultimately ended up paying the check plus $220 in fees because that was the only way that she could stop the threats and gain peace of mind. Wodena Cavner and Linda Parks, a wheelchair-bound retiree, went through similar experiences.

The three consumers have filed a class action lawsuit against Bounceback, Inc. in federal court in Spokane, Washington. My law firm, Gupta Beck PLLC, along with the Seattle firm of Terrell Marshall Daudt & Willie, represents the plaintiffs. You can read reports about the suit at Courthouse News and InsideARM. For an in-depth look at this practice, read Jessica Silver-Greenberg's article from a couple years back in the New York Times. Here's a clip from a local TV news story on our case:

Consumerist on candy-filled pill bottle for kids

Check out this troubling idea for an ad campaign: giving kids fake pill bottles filled with candy. Probably not encouraging the right associations. When confronted with this observation, the company, to its credit, agreed and stopped distributing the bottles.

Consumerist has the story. A testament to the power of consumer speech to change minds and policies. (HT: David Arkush.)

More on the D.C. Circuit's country-of-origin meat labeling decision

by Ted Mermin (guest blogger -- pictured to the right)

Just a quick follow-up on Allison Zieve's post on the country-of-origin-labeling case decided yesterday by the DC Circuit.

As Allison notes, the case addresses the constitutional standard under which government-mandated disclosures should be reviewed. In particular, the decision will affect the manifold federal administrative regulations -- requiring disclosures about everything from the risks of cigarette smoking to the number of calories in fast food to corporations' use of "conflict minerals" -- that may come before the DC Circuit.

The en banc court's decision overruled several earlier decisions by panels of the DC Circuit that had suggested government has less leeway under the First Amendment to require disclosures -- specifically, that more lenient review is appropriate only when government has acted to prevent consumer deception and confusion.  Those decisions had created a split with the other Circuits that have addressed the issue.  The en banc majority opinion brings the DC Circuit back in line with its sister Circuits: "[W]e answer affirmatively the general question of whether government interests in addition to correcting deception can be invoked to sustain a disclosure mandate under [the more lenient standard]...."  

The majority opinion garnered the votes of 7 of the 11 participating judges. Two others wrote concurring opinions upholding the law, and two penned dissents.  One of those dissents, by Judge Janice Rogers Brown, contains the following passage: 

Of course the victors today [beef producers] will be the victims tomorrow, because the standard created by this case will virtually ensure the producers supporting this labeling regime will one day be saddled with objectionable disclosure requirements (perhaps to disclose cattle feed practices; how their cattle are raised; whether their cattle were medically treated and with what; the environmental effects of beef production; or even the union status or wage levels of their employees). Only the fertile imaginations of activists will limit what disclosures successful efforts from vegetarian, animal rights, environmental, consumer protection, or other as-yet-unknown lobbies may compel. 

 (Disclosure: both Public Citizen Litigation Group, which Allison directs, and the Public Good Law Center, where I am ED, authored amicus briefs in support of the government.) 

White House moves against forced arbitration clauses in employment contracts

AP is reporting: "President Barack Obama is preparing to sign an executive order cracking down on labor violations by companies that contract with the federal government  .... In a bid to allow potential victims to have their day in court, the president's order will also prohibit companies pursuing government contracts from requiring their workers to agree upfront to mandatory arbitration, in which an intermediary hears both sides and then makes a binding decision. That provision, which applies to new contracts exceeding $1 million, will affect disputes brought under the anti-discrimination section of the Civil Rights Act or to accusations of sexual assault or harassment."

Bar Exam Snafu Frustrates Test-Takers

Think back to when you took the bar exam. Now try to think how you would feel if after you finished, you were unable to submit the exam. That is exactly what happened yesterday for exam takers in as many as seventeen states.

    New law graduates in many states experienced a technology snafu at the worst possible time Tuesday night: as they were attempting to upload bar examinations just before deadlines in their states. Many reported spending hours trying and failing to upload their answers. ExamSoft, a company that manages the bar test submission process in many states, acknowledged "slowness or difficulty" being experienced by many test-takers, and said that it was sorry for the difficulties many were having. The company, working with various state bar associations, announced 17 deadline extensions by states, so that people who couldn't submit their exams would not be penalized.

Many bar exams continue today, so the frustrated test-takers who were up late, some fearing that they may have failed by not submitting their day's results, have another stressful day ahead of them. Many of them without as much sleep as they might have had otherwise.

I guess from a consumer law standpoint, the interesting question is what rights the exam-takers may have if they failed due to this "snafu"? Are the exam-takers “consumers”? Do they have a claim under state UDAP statutes or for common law negligence? Just asking.

Court of Appeals upholds USDA country-of-origin labeling for meats

In 2002 and again in 2008, Congress enacted legislation requiring country-of-origin labeling (COOL) on certain foods, including meats. The 2008 statute defines country of origin as meaning, at least, where the animal has been born, raised, and slaughtered—the three major production steps.

After the U.S. Department of Agriculture (USDA) issued a regulation to implement the COOL requirement, a group of trade associations representing livestock producers, feedlot operators, and meat packers, and led by lead plaintiff the American Meat Institute, sued USDA. Among other things, they alleged that the regulation violated the First Amendment by forcing them to engage in speech.

Earlier this year, a 3-judge panel of the D.C. Circuit Court of Appeals upheld the regulation. The full D.C. Circuit then decided to rehear the case to consider the proper standard for evaluating a First Amendment challenge to government-compelled disclosures.

Yesterday, the full court again upheld the regulation. The court held that the disclosure “enables a consumer to apply patriotic or protectionist criteria in the choice of meat. And it enables one who believes that United States practices and regulation are better at assuring food safety than those of other countries, or indeed the reverse, to act on that premise.” These interests, the court held, satisfied the applicable First Amendment test.

Meanwhile, Canada has challenged the COOL regulation before the World Trade Organization, and that proceeding is still pending.

The "middle class" losing ground

This article by Matt O'Brien is about the same study that Scott posted about yesterday. But it highlights a longer-term phenomenon -- that the middle class has lost ground, not only in the recent past (because of the massive recession spurred by the mortgage meltdown), but over the last three decades:

Nostalgia is just about the only thing the middle class can still afford. That's because median wealth is about 20 percent lower today, in inflation-adjusted dollars, than it was in 1984. Yes, that's three lost decades. Now, as you might expect, the middle class has been hit particularly hard by the Great Recession and the not-so-great recovery. It's all about stocks and houses. The middle class doesn't have much of the former, but it does have a lot of the latter. And that's bad news, because, even though the crash decimated both, real estate hasn't come back nearly as much as equities have. So the top 1 percent, who hold more of their wealth in stocks, have made up more of the ground they lost. But, as the Russell Sage Foundation points out, the slow housing recovery means that, in 2013, median households were still 36 percent poorer than they were a decade earlier.

"The Typical Household, Now Worth a Third Less"

...is the title of this NYT article, which puts stark numbers on the problem of income inequality in the U.S. over the last ten years. Not surprisingly, the housing crisis has played a central role.

Design a quicker airport security screening method and earn big bucks

Seriously. The Transportation Security Agency wants to know whether consumers have solutions to long airport security lines. TSA is offering cash rewards for the best ideas about how to speed security checks. The total payout will be $15,000. Top prize is no less than $5,000, and no award will be less than $2500. TSA explains the contest this way:

The Challenge is to provide a simulation modeling concept that can form the basis to plan, develop requirements, and design a queue appropriately.  The concept will be used to develop a model to be applied in decision analysis and to take in considerations of site specific requirements, peak and non-peak hours, flight schedules and TSA staffing schedules.  Solvers are expected to provide the concept and provide evidence that it works ... .

Get the details here.

The economic cost of car crashes

Read this recent report by the National Highway Traffic Safety Administration. Loss of life and injuries from vehicle crashes go way beyond measurement in purely economic terms, but the economic losses (including the lost of quality life measured in economic terms) associated with crashes are very large: about $870 billion in the most recent year studied (2010) or about $900 for every person living in the U.S. Here are some key findings:

• Drunk Driving: Crashes caused by drivers under the influence of alcohol accounted for 18 percent of the total economic loss due to motor vehicle crashes and cost the nation $49 billion, an average cost of $158 for every person in the U.S. Including lost quality of life, these crashes were responsible for $199 billion or 23 percent of the overall societal harm caused by motor vehicle crashes. Over 90 percent of these costs occurred in crashes involving a drunk driver with a blood alcohol concentration (BAC) of .08 or higher.
• Speeding: Crashes involving a speeding vehicle traveling over the posted speed limit or too fast for conditions accounted for 21 percent of the total economic loss and cost the nation $59 billion in 2010, an average cost of $191 for every person in the U.S. Including lost quality of life, these crashes were responsible for $210 billion or 24 percent of the overall societal harm caused by motor vehicle crashes.
• Distraction: Crashes involving a distracted driver accounted for 17 percent of the total economic loss and cost the nation $46 billion in 2010, an average cost of $148 for every person in the U.S. Including lost quality of life, these crashes were responsible for $129 billion or 15 percent of the overall societal harm caused by motor vehicle crashes.
• Pedestrians and Bicyclists: Crashes involving pedestrians and bicyclists accounted for 7 percent of the total economic loss and cost the nation $19 billion in 2010. Including lost quality of life, these crashes were responsible for $90 billion or 10 percent of the overall societal harm caused by motor vehicle crashes.
• Seatbelts: Seatbelt use prevented $69 billion in medical care, lost productivity, and other injury related costs. Conversely, preventable fatalities and injuries to unbelted occupants accounted for 5 percent of the total economic loss and cost the nation $14 billion in 2010. Including lost quality of life, failure to wear seatbelts caused $72 billion or 8 percent of the overall societal harm caused by motor vehicle crashes.