Consumer Law & Policy Blog

Supreme Court hears argument on disparate-impact liability this morning

About an hour ago, the Supreme Court finished hearing oral argument on whether disparate impact claims are cognizable under the Fair Housing Act (as every circuit to address the issue has held since the Act's enactment in 1968). This blog has covered the issue repeatedly over the past few years.

This morning, Pemy Levy of Mother Jones had a piece on what's at stake in the case, while Lyle Denniston of SCOTUSblog previewed the legal arguments. We'll post the argument transcript when it becomes available.

Supreme Court rejects challenge to debit card 'swipe fees' rules

Reuters has the story.

Need a refresher on the Federal Reserve rule at issue? You can read the Fed's June 2011 press release and access the rule here.

Supreme Court reinstates appeal in LIBOR-manipulation suit

Vindicating a simple principle in a case with a complex procedural background, the Court held unanimously today in Gelboim v. Bank of America that investors who sued banks for manipulating the globally influential LIBOR interest rate in violation of federal antitrust law had the right to take an appeal when their case was dismissed.

The basic point that parties who lose in a federal district court can appeal to a federal court of appeals had been obscured here by the use of a procedure to consolidate numerous similar cases for certain purposes in a single court before a single judge. This type of consolidated procedure is known as an "MDL" for "multi-district litigation." The plaintiffs in the case decided by the Supreme Court today (Gelboim) had had their case joined to several dozen others in an MDL. The district court dismissed the Gelboim case without dismissing all the various cases in the MDL. Since the Gelboim plaintiffs had lost and that decision was final as to them, they appealed, but the court of appeals said they had to wait until the rest of the MDL concluded, however long that might be. The Supreme Court reversed the court of appeals today, holding that -- MDL or no -- when parties lose their case and the decision is final as to them, they may appeal. So the Gelboim appeal will now be heared on the merits back in the court of appeals.

A good decision for access to justice. You can read it here.

Consumer issues in tonight's State of the Union speech

The President highlighted consumer issues several times in his speech tonight.  Here's some of the relevant text:

• On Dodd-Frank and the CFPB: "We believed that sensible regulations could prevent another crisis, shield families from ruin, and encourage fair competition. Today, we have new tools to stop taxpayer-funded bailouts and a new consumer watchdog to protect us from predatory lending and abusive credit card practices."

• On vetoing GOP efforts to roll back Dodd-Frank: "We can’t put the security of families at risk by taking away their health insurance, or unraveling the new rules on Wall Street, or refighting past battles on immigration when we’ve got a system to fix. And if a bill comes to my desk that tries to do any of these things, it will earn my veto."

• On reducing crippling student-loan debt and making community college free: "Forty percent of our college students choose community college. ... Whoever you are, this plan is your chance to graduate ready for the new economy, without a load of debt. ... I want to spread that idea all across America, so that two years of college becomes as free and universal in America as high school is today. And I want to work with this Congress, to make sure Americans already burdened with student loans can reduce their monthly payments, so that student debt doesn’t derail anyone’s dreams."

• On middle class economics: "[A]t every moment of economic change throughout our history, this country has taken bold action to adapt to new circumstances, and to make sure everyone gets a fair shot. We set up worker protections, Social Security, Medicare, and Medicaid to protect ourselves from the harshest adversity. We gave our citizens schools and colleges, infrastructure and the internet — tools they needed to go as far as their effort will take them. That’s what middle-class economics is — the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules."

How Expensive It Is To Be Poor

...is the title of this op-ed from the NYT over the weekend. The piece highlights a recent Pew study finding that most wealthy Americans think that poor people have it easy then debunks that myth with some sobering numbers. These include the fact that an estimated 11 million Americans work without making enough to move out of poverty, and the fact the poorest fifth of American pay a higher percentage of their earnings in taxes than the wealthiest fifth. Another eye-popping number is the cost of being "unbanked" (i.e., not served by a financial institution), as many low-income Americans are: the article quotes a study by the St. Louis Federal Reserve calculating that when you add up the costs associated with cashing checks and buying money orders, a household with a net income of $20,000 might pay 6% of its income in fees. The steep cost of transportation for low-income individuals and the outsize effect of court fees and fines for minor offenses also contribute to the difficulties of being poor in America, as the article describes.

Will Lending Decisions Be Based on Consumer Use of Capital Letters?

by Jeff Sovern

In our casebook, we quote a 1982 article that reports on a credit scoring system that took into account, in calculating the score, the first letter of the applicant's last name.  Credit scoring has evolved since then but maybe history is repeating itself or at least rhyming.  Today's Times includes an article, Banking Start-Ups Adopt New Tools for Lending, that opens:

When bankers of the future decide whether to make a loan, they may look to see if potential customers use only capital letters when filling out forms, or at the amount of time they spend online reading terms and conditions — and not so much at credit history.

The article reports on what are essentially credit scoring systems that identify characteristics that correlate with paying back loans.  The article also discusses how these new big data systems run the risk of discriminating in violation of ECOA, and the fact that one of those involved, Raj Date, was once one of the key figures in the CFPB.

Telemarketer answers to FTC for false promises to consumers

The latest FTC settlement with a company that was deceiving consumers requires the company and its head "to turn over virtually all of their assets to the agency, and prohibit[s] them from deceiving consumers in any future sales pitches." The FTC reports:

Cream Group, Inc., which operates as Oro Marketing, and its mastermind Sami Charchian have agreed to a permanent ban on telemarketing to settle Federal Trade Commission charges that they targeted Spanish-speaking women with false promises that they could make money reselling brand-name goods, such as Gucci and Ralph Lauren.

The agency alleged that, far from fulfilling their promises, the California-based defendants charged hundreds of dollars up-front for shoddy, generic products. ...

“These defendants preyed on people who were just trying to make an honest living,” said Jessica Rich, Director of the Bureau of Consumer Protection. “Consumers are better off now that the defendants are out of the telemarketing business.”

The FTC's full press statement and links to the complaint and final order are available here.

Obama provides paid parental leave to federal workers; will push for universal guaranteed sick leave

The Washington Post reports.

New suit alleges CVS's misleading promotion of a nutritional supplement said to help treat or prevent macular degeneration

Check out Meredith v. CVS Health, a lawsuit just filed in California state court. The suit alleges that CVS promotes a nutritional supplement to help treat or prevent macular degeneration based on a National Institutes for Health study, even though the supplement doesn't contain the ingredients that NIH found might be beneficial. The Center for Science in the Public Interest is involved in the suit. Go here to see what CSPI has to say.

 

WSJ: Credit Counselor Has Ties to High-Interest Lenders

Here. The subtitle reads: Consumer-Debt Adviser Howard Dvorkin Has Financial Links to Firms Such as Payday Lenders That Often Drive People Deeper into Debt. 

And here's the beginning of the article:

One of the most prominent advocates for consumer debt relief has ties to firms that can leave people deeper in debt.

Howard S. Dvorkin is the founder and former president of Consolidated Credit Counseling Services Inc., a nonprofit that says it has helped more than five million Americans get their borrowing under control. Mr. Dvorkin says he has personally counseled at least 40,000 people on reducing their debt and navigating bankruptcy.

Mr. Dvorkin also owns interests in businesses that provide services to payday lenders, a Wall Street Journal review found.

 (HT: Mark Budnitz)