Consumer Law & Policy Blog

CFPB issues new report on complaints from servicemembers

The Consumer Financial Protection Bureau today issued its third Snapshot of Complaints Received from Servicemembers, Veterans and their Families. The report details the data and trends from consumer complaints received by the CFPB from members of the military and their families since July 2011.

Points highlighted by the CFPB include:

• Debt collection complaints have continued to rise since the CFPB's previous report and now make up 39 percent of total complaints. These complaints comprise the largest category of complaints from the military community.

• Credit reporting remains a top category of concern. 72 percent of these complaints are about incorrect information on credit reports. 

• Student loans are another concern. 49 percent of these complaints are about problems dealing with a lender or servicer. The CFPB notes seeing long-standing trends, such as servicemembers complaining about not being provided their Servicemembers Civil Relief Act rights.

Arbitration and Shots, or Why It Often Won't Matter If Arbitration is Cheaper Than Litigation

by Jeff Sovern

I don't know anyone who likes getting a shot.  One of my daughters, as a small girl, would hide under chairs at the pediatrician's office to avoid them, which by the way, was not an effective strategy.  But most of us are willing to get stuck with needles if the payoff is large enough, like avoiding a serious illness.  Even so, millions of Americans apparently do not judge reducing the risk of getting the flu a sufficient tradeoff for getting a flu shot.

Arbitration is similar.  Few consumers wake up in the morning looking forward to arbitration (though I'm not aware of any who hide under chairs to avoid it),  but some will tolerate it in pursuit of a significant payoff.  How big does that payoff have to be?  One lesson from the CFPB Arbitration Report is that the payoff has to exceed $1,000 for just about all consumers, because consumers just don't file arbitration proceedings for less than that. 

One argument frequently made for arbitration is that, as Alan Kaplinsky recently put it in an essay, Even in the CFPB’s Numbers, Arbitration Benefits Consumers,  33 Alternatives to the High Cost of Litigation, No. 4 at  55, 56 (Apr 2015):

Arbitration is a great solution for both consumers and companies because everyone benefits from a process that is faster, cheaper and more efficient and congenial than court litigation.

Assuming for the sake of argument that that is an accurate description of arbitration, it doesn't actually matter unless the payoff from using arbitration is large enough. That's for the same reasons most of us wouldn't get a shot no matter how fast, cheap, or efficient it is, just to avoid a single sneeze. When consumers have small stakes at issue, it is irrelevant whether litigation or arbitration is faster or cheaper, more efficient or congenial, because consumers, by and large won't choose either. Some consumers, though, will bring class actions, and other consumers can benefit from those class actions. That's because the existence of class actions deters corporate misconduct, and because some consumers will obtain compensation by complying with the requirements for doing so, assuming the class action results in a settlement or judgment awarding compensation (often not so many as would obtain compensation in a perfect world, but in a perfect world, we wouldn't need class actions).  The point is, for disputes of less than a thousand dollars or so, talk about whether arbitration is "faster, cheaper and more efficient and congenial" than litigation is a red herring.

DC Circuit Creates a Split in the Circuits: DC Anti-SLAPP Law Does Not Apply in Diversity

by Paul Alan Levy

Over the past couple of decades, federal courts have a uniform answer to the question whether state anti-SLAPP statutes applied when state law claims were pursued in federal court.   Anti-SLAPP statutes give the defendants in cases brought over the exercise of free speech rights on matters of public interest, and certain other categories of speech, the right to have the courts take an early look at the legal and evidentiary merit of the lawsuit, and to have them dismissed if the plaintiff cannot show that it has a realistic chance of success on the merits, and with an award of attorney fees, to boot.  

The First, Fifth and Ninth Circuits had generally held in a series of cases that these laws applied in diversity, in part because, as construed to be consistent with the rules generally allowing at least a modicum of discovery before summary judgment motions can be granted, they were largely consistent with Federal Rules 12 and 56, and in part because such laws represent a state legislative judgment about the conditions that ought to be imposed on state-law claims to protect the interests of defendants against having their free speech rights chilled through abusive litigation.  

But in a decision issued today, the DC Circuit has parted company with the First, Fifth and Ninth Circuits by deciding that the DC Anti-SLAPP law does not apply in cases where state law claims are litigated in federal court.

NYT on TPP and secrecy

We've discussed before some of the troubling aspects of the Trans-Pacific Partnership. Here's another one: the fact it's being negotiated in secret. As a Times op-ed argues,

[T]he secrecy of trade negotiations does not just hide information from the public. It creates a funnel where powerful interests congregate, absent the checks, balances and necessary hurdles of the democratic process.

Free-trade agreements are not just about imports, tariffs or overseas jobs. Agreements bring complex national regulatory systems together, such as intellectual property law, with implications for free speech, privacy and public health. . . .

Secrecy has real costs. Because the negotiating process combines a general shield from the public with privileged access for industry advisers, the substance of American free trade agreements does not represent truly national interests. It represents the interests of those members of industry who sit on the office’s Industry Trade Advisory Committees, which have regular access to negotiating information.

Read the full piece here.

Title VII's anti-retaliation provision covers telling a sexual harasser to stop

In a ruling that seems too obvious to have been the subject of debate (though it was), the Sixth Circuit held this week that Title VII's protection against being subject to discrimination "because [the employee] opposed . . . an unlawful employment practice,” 42 U.S.C. § 2000e-3(a), covers a worker who resists sexual harassment by a supervisor.

The case was brought by the EEOC against a company called New Breed Logistics. A New Breed supervisory employee harassed three female workers, then retaliated against them when they rejected his advances. In affirming a verdict against the company, the Sixth Circuit rejected New Breed's argument that the workers not were protected against retaliation for resisting unwanted sexual advances.

Surprisingly, New Breed was able to cite some case law for its reading of the law, which seems to defy common sense as well as the text of the statute, which speaks only of "oppos[ing]" an unlawful practice generally, not making a formal complaint or complaining to a particular person. As the Sixth Circuit pointed out in rejecting New Breed's argument, "It would be anomalous, and would undermine the fundamental purpose of the statute, if Title’s VII’s protections from retaliation were triggered only if the employee complained to some particular official designated by the employer."

You can read the decision here.

 

Deutsche Bank to pay $2.5 billion fine over rate-rigging

As the New York Times reports today,

Deutsche Bank will pay a $2.5 billion penalty to United States and British authorities to settle accusations that it helped manipulate the benchmarks used to set interest rates on trillions of dollars in mortgages, student loans, credit cards and other debt, officials said on Thursday.

The rate that was manipulated is LIBOR, a London-based bank rate that is a critical benchmark for interest rates around the world. (Here's a primer.) Several major financial institutions in various countries were involved in manipulating the rate for their own profit.

As we've previously noted, UBS paid a fine of more than $1 billion in 2012 for its involvement, although no one seems to be able to stop using the rate.

Here's today's Times story.

And here's a statement from Public Citizen applauding the guilty plea but raising questions about accountability and deterrence -- noting, for instance, that no traders are being punished and that the penalty will be borne by the bank's shareholders, not the wrongdoers.

Public health advocates urge FDA to regulate e-cigarettes

"It's Time to Regulate E-Cigarettes" is the title of an op-ed in today's New York Times by former Food and Drug Administration Commissioner David Kessler and Campaign for Tobacco-Free Kids President Matt Myers.

Noting that "youth e-cigarette use tripled in just one year, surpassing the use of traditional cigarettes," the writers express concern that "E-cigarettes have so far escaped federal regulation and are being promoted using the same playbook cigarette companies have used to addict generations of teenagers." They urge the FDA to finalize a strong rule regulating these products. "Although a proposed regulation is wending its way through the bureaucracy, it is unclear when it will be finalized, or in what form."

The op-ed is here.

American Banker Reports House Voted to Cap CFPB Funding Requests

The headline reads Battle Over CFPB Funding Erupts Anew in House and the story is here.

McClatchey: Obama threatens to veto bill that would cut funding for consumer agency

by Jeff Sovern

Here. Excerpt:

The bill as amended lowers the bureau’s budget cap by $9 million over 10 years. The cap is set at 618.7 million for fiscal year 2015.

Given that the law already caps the bureau’s funding and allows increases it only in line with the government’s employment cost index, the lower cap proposed in the amendment “is solely intended to impede the (bureau’s) ability to carry out its mission of protecting consumers in the financial markets,” said the White House Office of Management and Budget in a statement released Tuesday.

“These reductions to the caps could result in, among other things, undermining critical protections for families from abusive and predatory financial products,” the statement said.

If the bill came to the president’s desk as amended, his senior advisers would recommend he veto it, the statement said.

A spokesman for the GOP-controlled House Committee on Financial Services said in an email that the bill doesn’t cut funding; it just lowers the maximum amount the bureau could request from the Federal Reserve during two of the next 10 years by 0.1 percent.

“If this budget cap were applied to the typical American family with a household income of $50,000 a year rather than Washington bureaucrats, it would be the equivalent of tightening their budget by $7 per year,” wrote the spokesman, Jeff Emerson. “Most every American has done much more than that in the Obama economy. Surely the (consumer bureau) can, too.”

I wonder if Emerson would like to see similar reasoning applied to proposals to cut the defense budget.  Most Americans do without tanks and fighter planes.  Surely the Department of Defense can too.  I look forward to a fuller explanation of why reducing the amount the Bureau can request is not a funding cut but it is nevertheless equivalent to "tightening" household budgets.

 

 

 

 

 

 

Read more here: Inhttp://www.mcclatchydc.com/2015/04/21/263903/obama-threWhatatens-What intertWhat o-veto-bill-that.html#storylink=cpy

 

Free access to credit scores for struggling consumers

FICO -- the business analytics company that calculates everyone's credit score -- has agreed to provide free credit scores to consumers who seek counseling through non-profit credit counseling organizations. FICO noted that it was influenced by the Consumer Financial Protection Bureau, which believes that credit counselors' work is more effective when the counselor and consumer can discuss the consumer's credit score.

Federal law gives everyone the right to a free copy of his or her credit report every 12 months from each of the three major credit reporting companies -- Experian, Trans Union, and Equifax. But the law does not give consumers the right to the credit score -- a key number that lenders use to decide whether and on what terms to extend credit. Typically, the consumer can pay a fee to get the score.

But in recent years, some credit card companies have started giving their customers free access to their credit scores. And now FICO is making the score available to some consumers as well.