Consumer Law & Policy Blog

FCC fines AT&T $25 million over consumer privacy breaches

Reports the New York Times today:

The Federal Communications Commission announced on Wednesday a $25 million fine against AT&T for failing to protect the personal information, including the Social Security numbers, of its customers.

Employees at AT&T call centers were found to have stolen the names and Social Security numbers of about 300,000 of the wireless carrier’s customers in the United States. Those customer service workers at call centers in Mexico, Colombia and the Philippines sold the information to third parties.

It's the largest data security fine the agency has ever issued. The full story is here.

Busy day for the Federal Trade Commission

The Federal Trade Commission announced three settlements yesterday:

• The FTC announced a settlement with Network Solutions LLC over charges that the company misled consumers who bought its web hosting services by promising a full refund if they canceled within 30 days. In reality, the company withheld substantial cancellation fees from most refunds. The FTC's press release is here.

• The FTC announced that two U.S. businesses, TES Franchising, LLC, and American International Mailing, Inc., agreed to settle charges they falsely claimed they were abiding by an international privacy framework known as the U.S.-EU Safe Harbor, which enables U.S. companies to transfer consumer data from the European Union to the United States in compliance with EU law. The FTC complaints against the companies allege that their websites indicated they were currently certified under the U.S.-EU Safe Harbor Framework and U.S.-Swiss Safe Harbor Framework, when in fact their certifications had lapsed years earlier. The FTC's press release is here.

Wall St Journal on Concepcion's consequences

Predictably, after the Supreme Court expanded the preemptive effect of the Federal Arbitration Act in its 2011 Concepcion decision, employers took advantage, reports the Wall St. Journal: "Arbitration clauses with class-action waivers r[o]se sharply after 2011 court ruling."

Apologies for the subscriber-only link, but if you have access, it's worth a read, here.

CFPB's new effort to advance financial education in schools

The Consumer Financial Protection Bureau announced today that it is launching a nationwide effort to advance financial education in schools. The Bureau is publishing “Advancing K-12 Financial Education: A Guide for Policymakers,” a resource guide which contains strategies for furthering the development and implementation of financial education in states. The CFPB press release is here.

Can Wall Street intimidate pro-regulatory senators?

That’s the question posed by this Reuters story, which suggests that big banks will retaliate against the pro-regulatory proposals of Senators Elizabeth Warren and Sherrod Brown by withholding campaign contributions from Senate Democrats.

Sen. Warren, for her part, does not plan to play along, she explained in a blog post (entitled "Wall Street isn't happy with us") on her web site: "They can threaten or bully or say whatever they want, but we aren't going to change our game plan. . . . It's up to us to fight back against a financial system that allows those who broke our economy to emerge from a crisis in record-setting shape while ordinary Americans continue to struggle."

Facebook is tracking even non-users

Reports Law360 last week: "Facebook Unlawfully Tracking All Visitors, Report Says." The report in question was prepared by the Interdisciplinary Center for Law and ICT at the University of Leuven in Belgium, and it accuses the social networking behemoth of violating EU privacy law by tracking the activities of individuals who are not users of Facebook but merely visitors to any site belonging to the facebook.com domain. As Law360 explains:

According to the report, the site places a cookie on nonusers' devices that contains a unique identifier and has an expiration date of two years, and uses a “range of additional cookies” for visitors who are already users of the site. . . .

The cookies deliver to the company a wealth of information about users' activities, such as the URL of webpages they have visited and information about the browser and operating system, the report added.

Read the full story here.

For non-subscription coverage, the Guardian also has the story.

Nathalie Martin Study of Undocumented Immigrants' Banking and Credit Habits

Nathalie Martin of New Mexico has written Giving Credit Where Credit is Due: What We Can Learn from the Banking and Credit Habits of Undocumented Immigrants.  Here's the abstract:

Undocumented immigrants currently make up more than 5% of the U.S. labor force and 7% of school-age children. Numbering over eleven million, undocumented immigrants unquestionably comprise a significant segment of the population, yet most lack financial security and stability on multiple fronts. In addition to the everyday risk of deportation, many risk being taken advantage of on the basis of their immigration status, in both employment and debtor-creditor relationships. While some of these financial conditions are well-chronicled, this Article describes the first empirical study of the debtor-credit relationships of undocumented immigrants. Through live interviews, this Article recounts the general financial impediments undocumented immigrants face in trying to work, pay taxes, raise children, participate in the U.S. economy, and simply survive.

Among other topics, this Article explores whether undocumented immigrants use traditional financial institutions or more informal ones, and whether predatory lenders such as payday and title lenders have made inroads into immigrant communities. It further explores our study participants’ perception of and attitudes toward various forms of credit, with the hope of using this sample to gain more generalized insights into the credit uses and attitudes of undocumented Americans as a whole in today’s consumer credit economy.

Through our study,  we were able to uncover a few of the grim realities of living in the financial shadows, with only precarious means of financial support, distanced from social safety networks at home, at legal disadvantage, and without a place at any policy-related table. Indeed, we conclude that the financial condition of many undocumented immigrants is far more precarious than one might imagine, as shown through our data that 74% of the persons interviewed would not be able to cover a $100 emergency if it came up. We also discovered fear of and disdain for credit among many undocumented persons, demonstrating sensible ideas about credit, which many of us in the mainstream population could learn from.

How much would GMO labeling cost a family per year?

The Washington Post concludes that industry claims that state laws requiring food labels to disclose a products contains genetically modified ingredients would cost families $500 more in groceries each year are wildly exaggerated. The article is here.

As the article indicates, the costs claimed by industry are largely due to expected changes in consumer behavior. That is, if food labels disclose the presence of GMOs, consumers will opt for products without GMOs, which are purportedly more expensive. The argument that the cost would rise thus incorporates the recognition that consumers don't want GMO foods.

The $500 figure assumes that companies will switch to more expensive, non-genetically modified ingredients, and then pass all the incurred costs to consumers. It also assumes that all extra costs to stock, warehouse and produce new, non-genetically modified products will translate to higher prices at the cash register. It is difficult to imagine all of these assumptions will materialize for every company.

 

 

Relief for victims of mortgage crisis?

"Given the many billions of dollars financial companies have paid in regulatory and legal settlements related to the mortgage crisis, how much money has actually found its way into the pockets of investors harmed by their actions?

"Less than you may think."

That's the start of a New York Times article entitled "Victims of Financial Wrongdoing Need a More Muscular S.E.C."

Talesh Article: How Private Organizations Influence the Content and Meaning of Consumer Protection Legislation

Shauhin A. Talesh of Irvine has written Institutional and Political Sources of Legislative Change: Explaining How Private Organizations Influence the Form and Content of Consumer Protection Legislation, 39 Law and Social Inquiry 973 (2014 ). Here's the abstract:

This article explores how private organizations influence the content and meaning of consumer protection legislation. I examine why California forced consumers to use a private dispute resolution system that affords consumers fewer rights, while Vermont adopted a state-run disputing structure that affords consumers greater rights. Drawing from historical and new institutional theories, I analyze twenty-five years of legislative history, as well as interviews with drafters of the California and Vermont laws, to show how automobile manufacturers weakened the impact of a powerful California consumer warranty law by creating dispute resolution venues. As these structures became institutionalized in the lemon law field, manufacturers reshaped the meaning of legislation.

Unlike California, the political alliances in Vermont and a different developmental path led to a state-run dispute resolution structure. I conclude that how social reform laws are designed and how businesses influence social reform legislation can increase or decrease the achievement of a statute’s social reform goals.