Consumer Law & Policy Blog

Sen. Warren breaks down what's wrong with the House's amendments to Dodd-Frank

Check out this video of her speech -- it's a great overview of what's wrong, both substantively and procedurally, with the Dodd-Frank amendment incorporated in the spending bill the House passed last night. (The speech was delivered Wednesday, before the House's vote Thursday.)

CFPB pursues student debt relief scams, requires more accountability from credit reporting agencies

A productive week for the CFPB. The agency took enforcement actions against two debt-relief outfits who, according to the agency, charged illegal fees and made false promises about rates and/or results, among other nefarious activity. Read the details here.

Separately, following up on its report focusing on the effect of unpaid medical debt on consumer credit, the agency announced new reporting standards for the credit reporting agencies regarding their investigations of consumer disputes. Read more here.

NCLC's Lauren Saunders on payday lending reform

Colorado's cap on payday loan interest rates has had some success, Lauren explains, but it's not enough: she calls for a stricter cap and front-end underwriting requirements that ensure that borrowers are actually able to repay their loans. Read her whole piece here.

Pa. court overturns house's tax sale over $6.30 bill

A Pennsylvania appeals court yesterday reversed the sale of a home that was triggered by an unpaid tax bill of $6.30 in 2004, which with interest had increased to $235 by the time the property was sold at auction in 2011. The court held that the auction sale of the $280,000 home was not valid because the county tax bureau had not offered the owner an installment payment plan. The Beaver County's Timesonline.com has the story.

Trouble in Toyland, 29th edition

Ready for this year's holiday gift-buying binge?

Before you set out to shop for kids, read U.S. PIRG's 29th annual edition of Trouble in Toyland. Go here for the excutive summary. The report surveys the dangers to kids posed by toys. The report covers toxins (such as lead and arsenic), choking hazards, excessively loud toys, laceration hazards, and strangulation risks. It's got a ton of data on toys that maim and kill and makes detailed policy suggestions.

Go here to read about categories of toys that tend to pose hazards. Go here to take a look at particular toys that PIRG says you should avoid. And read eight tips for avoiding dangerous toys.

 

Over-enforcement of consumer protection statutes?

The Boston Globe brings us word of a series of email exchanges in which a Harvard Business School professor (with whom I am acquainted) seems to have gone a bit overboard in invoking the treble-damages provision of the Massachusetts Consumer Protection Act, chapter 93A.

UPDATE: 

The professor has apologized for "what I said and how I said it."

Arbitration and Privatizing Law

I have longed argued that the problem with forced arbitration goes beyond whether it is “fair,” whether the consumer understands it, or whether it is cost efficient, here, here, and here. The real problem with forced arbitration is the affect it has on our system of justice. Recently,  Professor Maria Glover of Georgetown University Law Center wrote an excellent article on the dangers of privatizing law through forced arbitration. Her article, Disappearing Claims and the Erosion of Public Law, will be published in volume 124 of the Yale Law Journal, but a version is now available on SSRN. Here is an abstract of her article:

    The Supreme Court’s arbitration jurisprudence in the last five years represents the culmination of a three-decade long expansion of the use of private arbitration as an alternative to court adjudication in the resolution of disputes of virtually every type of justiciable claim. As scholars have traced, privatizing disputes that would otherwise be public may well erode public confidence in public institutions and the judicial process. Accordingly, many observers have linked this decades-long privatization of dispute resolution to an erosion of the public realm. In this piece I argue that the Court’s recent arbitration jurisprudence undermines the public law itself.

     Indeed, whereas the shift from dispute resolution in courts — the public realm — to dispute resolution in arbitration — the private realm — initially undermined values of adjudication, the shift from public lawsuits to private arbitration now also threatens values of lawmaking. This new threat to the lawmaking function stems from the Court’s authorization of mandatory private arbitration clauses as a way for private parties to construct procedural rules that have the foreseeable — indeed, possibly intended — consequence of rendering those claims a nullity. The Court’s recent arbitration jurisprudence thus threatens the values of public dispute resolution in a fundamentally new and more dramatic way. Through the procedural device of private arbitration, private parties can effectively rewrite substantive law by precluding or severely impeding the assertion of certain types of civil claims. And they can do so almost entirely outside of public view, through commercial (and sometimes) confidential contracts subject to virtually no public scrutiny or regulatory oversight. In short, the Court has handed private parties the power to recalibrate substantive legal obligations, and because this power is largely unchecked, there is currently little to stop this erosion of public law.

The Enforcers & the Great Recession

That is the name of this article by law professor Mark Totten. Here is the abstract:

No one played a more vital role responding to the worst economic crisis since the Great Depression than a small band of state attorneys general (AGs). Yet this story has never been told nor its implications considered. For more than a decade these AGs brought enforcement actions across the residential mortgage lending industry, reaching the origination, servicing, and securitization processes. From roughly 2000 to 2008, they targeted several of the largest subprime lenders for predatory and discriminatory lending. And they moved in the face of federal inaction — at times, even opposition. With the economic crisis everywhere visible by early 2009, they turned toward abuses in mortgage servicing and securitization. While they often collaborated with their federal counterparts during this time period, these AGs continued to lead and shape the enforcement agenda. This narrative demonstrates that states are integral to the task of consumer financial protection. Congress was right to empower states in the Dodd-Frank Act of 2010 by scaling-back preemption and giving the AGs concurrent enforcement powers. The AGs not only serve as a stopgap when federal regulators fail to act, but they alter the quality of enforcement in positive ways not replicated by even engaged federal regulators. The marks of AG enforcement include information advantages; agility; a remedial focus; resistance to capture; and entrepreneurialism. Moreover, these events also suggest a new enforcement model in the area of consumer protection that may sometimes prove more efficient than earlier approaches: the multigovernment, multiagency action. And while these observations concern consumer financial protection in the first instance, they also have implications for ongoing conversations about federalism and enforcement.

Is the Affordable Care Act achieving its goals?

The Affordable Care Act has taken some hits in the courts (but so far has survived the biggest attacks), and it is not terribly popular.

But is it working as it was intended? Yes, according to this piece by Sarah Kliff. An excerpt:

[I]f you look beyond the political fights, the picture looks very different [from what's been reported recently in the press]. Obamacare is, policy-wise, having a great month — maybe even the law's best month ever. Jonathan Chait wrote a piece in New York magazine detailing four recent studies that show Obamacare is working. Some of it has to do with the part of the law that we all know the best — the coverage expansion to millions of Americans. Study after study shows that the Affordable Care Act has increased the number of Americans with health insurance. And this wasn't actually taken as a given at this point last year: there was some speculation that coverage rates might actually drop in 2014, as Obamacare's regulations cancelled millions of individual policies. Then there are the parts of Obamacare that are about improving the health care system not just for the uninsured, but for everyone who goes to the doctor. And here, too, the law seems to be working. Health care costs grew at their slowest rate ever in 2013 — in part due to Obamacare's spending cuts — according to a recent study in Health Affairs. And hospitals have been making fewer deadly medical errors since the Affordable Care Act began cutting Medicare reimbursements for institutions with lots of errors.

Supreme Court denies cert in BP oil spill case

Today the Supreme Court denied BP's petition seeking review of a case interpreting the company's multi-billion dollar settlement over its 2010 oil spill in the Gulf of Mexico. The company claimed (both in court papers and via a public relations campaign) that it is improperly being forced to compensate losses unrelated to the spill.

Read more from the Washington Post here.