Consumer Law & Policy Blog

The Consumer Financial Protection Bureau implements U.S. v. Windsor

In United States v. Windsor, 133 S. Ct. 2675 (2013), the Supreme Court held section 3 of the Defense of Marriage Act unconstitutional as a violation of equal protection and due process principles. Section 3 said that for the purpose of interpreting federal law, "marriage" must be construed as the legal union of one man and one woman as husband and wife and that "spouse" must be construed only as a spouse in a man-woman marriage.

Richard Cordray, the director of the Consumer Finanical Protection Bureau, has issued this letter instructing agency staff to implement Windsor in all of the agency's work. So, for instance, when an regulation enforced by the CFPB uses the term "marriage," the term now includes state-sanctioned same-sex marriages. State-sanctioned civil unions and domestic partnerships will not count, however.

Read this piece about forced arbitration

Herman Schwartz has written How Consumers are Getting Screwed by Court-Enforced Arbitration in The Nation.

(Hat tip to Paul Bland)

John Oliver on Hobby Lobby (right before it came down)

Go here or click on the embedded video below.

 

Consumer Financial Protection Bureau kicks off its next cycle of "honors" lawyer hiring

The CFPB has started hiring for its next class of Louis D. Brandeis Honors lawyers, who will begin work in fall 2015. Here's how the agency describes the positions:

The Louis D. Brandeis program is a two-year fellowship designed to provide exceptional law students and recent graduates with early, substantive opportunities to use and develop their legal skills and make a difference in the lives of American consumers. Throughout the course of the program, Honors Attorneys will be given increasingly complex assignments designed to build their legal skills and increase their ability to support the CFPB’s mission.  Honors Attorneys will be placed in specific Bureau offices, but may also have opportunities to rotate into different offices to develop additional skills and collaborate on projects across the Bureau. In addition, the program includes promotion and training opportunities to enhance analytical thinking, writing, communication and other legal skills, as well as an understanding of the Bureau’s mission and work. Honors Attorneys may be converted to permanent positions. Attorneys who successfully complete the two-year program will likely be given opportunities to remain with the Bureau.

The pay is very good. The positions start at about 81K to 89K, with a chance to move up to the 91K to 149K range.

EPIC complains to FTC about Facebook's "emotional contagion" study

The June 17 edition of the journal Proceedings of the National Academy of Sciences (PNAS) included an article on an “emotional contagion” study conducted for Facebook. For the study, researchers randomly chose more than 680,000 Facebook users and altered their news feeds so that some saw fewer positive posts and others saw fewer negative posts. The study looked to see what effect the positive or negative news feeds had on users’ status updates. The study, when it became public, sparked controversy because Facebook users did not know that they were being used as research subjects. 

Now, the Electronic Privacy Information Center (EPIC) has filed a complaint and request for investigation with the Federal Trade Commission (FTC) arguing that Facebook engaged in deceptive business practices and violated an earlier privacy agreement with the FTC. EPIC complains that Facebook “purposefully messed with people’s minds.” The complaint states: “At the time of the experiment, Facebook did not state in the Data Use Policy that user data would be used for research purposes. Facebook also failed to inform users that their personal information would be shared with researchers. Moreover, at the time of the experiment, Facebook was subject to a consent order with the Federal Trade Commission which required the company to obtain users’ affirmative express consent prior to sharing user information with third parties.”

Are you willing to stand for a couple hours to get a cheaper flight?

Here.

Michelle Boardman Reviews Margaret Radin's Boilerplate

Michelle Boardman of George Mason has written Consent and Sensibility: A Review of Margaret Jane Radin's Book, 'Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law,' 127 Harvard Law Review  1967 (2014).  Here is the abstract:

In this book, Professor Margaret Radin offers a fresh look at the fit between boilerplate contracts and our notions of consent.  She also builds a case against allowing certain contract terms to create a "rights deletion scheme" aimed at shrinking access to legal redress. 

This review explores both rich lines of analysis but concludes they need not intertwine.  Radin's argument is crafted in the language of consent; I argue that her proposed resolution concerns not consent but welfare.  To the extent the widespread use of redress clauses leads to a collective harm, the issue is not one of individual consent.  If the rights at hand are basically inalienable, as Radin holds, the problem is not that one does not consent but that one is permitted to do so; improving the quality of individual consent will not address the harm.

Taking Radinian consent on its own merits, the review also explores how Radin confronts the challenge of presenting a conception of consent that delegitimizes boilerplate without delegitimizing "ordinary" contractual consent. I compare Radin's approach with other conceptions of consumer consent and offer the possibility of consenting to a continuum of options, where the consumer agrees to a deal ignorant of a specific term but aware of the possible range of terms.

A Comment on Comments on the CFPB Arbitration Study

by Jeff Sovern

The CFPB Monitor blog has a post titled Industry trade groups urge OMB not to approve CFPB arbitration telephone survey about a filing by the American Bankers Association, the Consumer Bankers Association and the Financial Services Roundtable. They "strongly recommend that OMB not approve the proposal because it will not produce information of practical utility . . . ."  I couldn't disagree more. 

The survey will ask respondents what credit card they have.  From that, the CFPB should be able to determine if the credit card contract includes an arbitration clause, waives the right to a jury trial,  and the right to participate in class actions, among other things, because the Bureau has credit card contracts on file.  The survey asks respondents about all those rights. Accordingly, the Bureau should be able to find out how aware consumers are about their surrender of those rights.

Suppose for the sake of argument that the Bureau finds that significant numbers of consumers don't realize that they have given up those rights.  Wouldn't that raise questions about whether arbitration clauses are abusive within the meaning of 12 U.S.C. section 5531(d), which provides that conduct can be abusive a long as it “takes unreasonable advantage of— (A) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service . . . "?  The abusive definition establishes public policy that the Bureau should consider in exercising its discretion to ban or regulate arbitration in consumer financial contracts under the Dodd-Frank Act.

I will have a lot more to say about consumer understanding of arbitration clauses later in the summer.

Drahozal Chapter on AAA Consumer Arbitration

Christopher R. Drahozal of Kansas has written AAA Consumer Arbitration, forthcoming in Beyond Elite Law: Access to Civil Justice for Americans of Average Means (Samuel Estreicher & Joy Radice eds. Cambridge University Press).  Here's the abstract:

This chapter has provided an overview of consumer arbitrations administered by the American Arbitration Association, the largest administrator of consumer arbitrations.  It does not, of course, purport to resolve the ongoing debate over arbitration and access to justice.  A consumer’s incentive to bring a claim (and an attorneys’ incentive to take a case) depend on the costs of the process and the expected outcome in the forum.  With the recent amendments to its consumer arbitration rules, the AAA reduced the cost to consumers of bringing claims in arbitration, both by lowering the upfront fees and by largely precluding reallocation of fees to consumers in the award.  The expected outcome in arbitration (in particular, relative to the expected outcome in court) presents a much more difficult question because limits to available data preclude comparison of similarly-situated complainants.  More research remains to be done. 

In New York, a big victory for local anti-fracking ordinances

This week, New York's highest court has confirmed the right of towns to ban fracking. Though legally a case about the power of localities versus the preemptive effect of state law, the result is that opponents of fracking have a powerful tool -- local ordinances -- to prevent fracking in their communities. (Fracking is a process of gas extraction that can produce some pretty scary collateral damage.)

The court decision begins with a summary of its holding:

We are asked in these two appeals whether towns may ban oil and gas production activities, including hydrofracking, within municipal boundaries through the adoption of local zoning laws. We conclude that they may because the supersession clause in the statewide Oil, Gas and Solution Mining Law (OGSML) does not preempt the home rule authority vested in municipalities to regulate land use.

And the Washington Post has the story.