Consumer Law & Policy Blog

The CFPB's guides to money management

The Consumer Financial Protection Bureau has published consumer guides for managing money particularly aimed at helping newcomers to the U.S. Here's what the CFPB says about the guides, along with links to the guides themselves:

Beneficiary. Collateral. Debit. Fair market value. These terms might look familiar, but what do they really mean? Now imagine how confusing financial language might sound if you didn’t grow up speaking English. According to recent studies, people with limited English proficiency may be more likely to fall prey to frauds and schemes, and it can be harder to manage money on a day-to-day basis. That’s why we’ve developed the Newcomer’s Guides to Managing Money to provide recent immigrants with straightforward information about basic money decisions.

Each guide features short tips to help new immigrants, and people who may be new to the U.S. banking system, avoid financial pitfalls. The guides also include information on how to submit a complaint if you’re having a problem with a financial product or service.

You can download, post, and share the Web-ready versions of the guides in English and Spanish (more languages coming) or order printed copies.

 

Ways to receive your money

Have you received a paycheck but aren’t sure whether to cash it or put it into a bank account? This guide provides information about receiving wages or payments. You can use this guide to compare the benefits and risks of getting paid in cash, with a check, by direct deposit, or on a card. [English | Español]

 

Checklist for opening an account

If you’re interested in opening a bank or credit union account, you can use this guide and checklist to make sure you have the required paperwork before opening your account. [English |Español]

 

Ways to pay your bills

Are you trying to decide whether to pay your rent by check or credit card? Take a look at this guide to compare the benefits and risks of paying regular and one-time bills by check or money order, by direct debit, online, or in cash. [English | Español]

 

Selecting financial products and services

If you’re trying to decide which financial services are right for you, this guide provides information about common transactions, including ATM cash withdrawals and debit card purchases.
[English | Español]

These guides are part of our commitment to provide people who may be new to the U.S. banking system, including people with limited English proficiency, the information they need to make the best financial decisions for themselves and their families.

We’re also connecting with consumers who use a language other than English by explaining consumer protections and introducing them to our complaint system. Check out more materials available in other languages as well as our website in Spanish.

Class Actions and the Counterrevolution Against Federal Litigation

That's the name of this article by law professor Stephen Burbank and political scientist Sean Farhang. Its part of a larger study about the counterrevolution against private enforcement of legal rights. Here is the abstract:

In this article we situate consideration of class actions in a framework, and fortify it with data, that we have developed as part of a larger project, the goal of which is to assess the counterrevolution against private enforcement of federal law from an institutional perspective. In a series of articles emerging from the project, we have documented how the Executive, Congress and the Supreme Court (wielding both judicial power under Article III of the Constitution and delegated legislative power under the Rules Enabling Act) fared in efforts to reverse or dull the effects of statutory and other incentives for private enforcement. We focus here on one particular instrument of private enforcement, but we do so in the light of our broader research. We begin with a sketch of the modern class action. We then consider how attempts to curb its enforcement potential have fared in the elected branches, at the hands of those who brought it forth – the Advisory Committee on Civil Rules – and, finally, in the decisions of the Supreme Court. We conclude that institutional patterns in the domain of class actions largely track the story we discern in our larger project: the Supreme Court has been, by far, the most effective institutional agent of retrenchment.

ProPublica study finds blood thinning drug widely used, insufficiently monitored

Today's Washington Post reports on a ProPublica expose concerning the use of the drug Coumadin, a popular (in the sense of widely used) anti-coagulant used by many elderly people to prevent blood clotting. (The Post headline jumped out at me in part because two of my own relatives use or have used the drug in recent years.) But proper use of the drug requires careful calibration of the dosage, and ProPublica found that too often the necessary calibration isn't happening, and serious problems result:

When nursing homes fail to maintain this delicate balance, it puts patients in danger. From 2011 to 2014, at least 165 nursing home residents were hospitalized or died after errors involving Coumadin or its generic version, warfarin, a ProPublica analysis of government inspection reports shows. Studies suggest there are thousands more injuries every year that are never investigated by the government.

Even though data from North Carolina show that errors involving Coumadin are a leading cause of patient death in nursing homes,

Coumadin deaths and hospitalizations have drawn only limited attention from the Centers for Medicare and Medicaid Services (CMS), the federal agency that regulates nursing homes. Federal officials haven’t tallied Coumadin cases to see the full extent of the damage or identify common problems involving the use of the drug. Neither has the American Health Care Association, the trade group for nursing homes.

The full Post story is here.

FCC issues TCPA rule

On June 18, the FCC announced adoption of a set of a set of rules to resolve questions about the Telephone Consumer Protection Act. See our summary here.

Last Friday, the FCC issued the declaratory ruling.

The TCPA Blog has this business-side perspective.

George Mason Study of Self-Regulation of Privacy

Siona Robin Listokin of George Mason's  School of Policy, Government, and International Affairs has written Industry Self Regulation of Data Privacy and Security.  Here is the abstract:

Industry self-regulation of consumer data privacy and security has been proposed as a flexible alternative and compliment to traditional government regulation. This study analyzes whether different types of existing industry-led standards improve online privacy and security. The paper examines which types of firms join voluntary standards and whether there is a difference in outcomes between trade association memberships (like the Digital Advertising Alliance) and certification programs (like TRUSTe). Results suggest that more trafficked websites are more likely to adopt standards, and that trade association membership does not have an effect on privacy and security performance. There is some evidence that paid certification can hurt subsequent privacy and security. This study also compares website privacy measures and highlights the need for a valid privacy metric.

Fish Oil, Snake Oil, the FDA and the Courts

Brian Wolfman blogged yesterday about a Washington Post story pointing out that fish oil supplements are being marketed to consumers to lower the risk of heart disease despite the absence of scientific evidence bearing out their effectiveness. The FDA allows manufacturers of the supplements to get away with making a "qualified health claim" that "supportive but not conclusive studies" suggest that they will reduce risks of heart disease. In light of the current science described in the Post article, even that may be an overstatement. But, fearful of being sued for violating the First Amendment rights of supplement manufacturers, the FDA exercises "enforcement discretion" not to go after them for making that claim.

That's bad enough, but it gets worse. Amarin, the manufacturer of Vascepa, a prescription drug containing omega-three fatty acids derived from fish oil, now wants to make the same claim for the drug.

Russell Paper on Separating and Pooling in Response to Consumer Financial Mistakes

Jacob Hale Russell of Stanford has written Misbehavioral Law and Economics: Separating and Pooling in Responses to Consumer Financial Mistakes. Here is the abstract:

Consumers’ choices in financial contracts do not always tell us what they really want. Put differently, revealed preferences are sometimes unreliable indicators of actual preferences. For instance, consider two consumers who take out the same high-interest payday loan. One may have accurately assessed that they have an investment, such as funding a car repair or bus ticket that will transport them to work, whose expected return exceeds the cost of the loan; the other may have made a costly miscalculation about their ability to repay, a mistake that will send them into a spiral of increasing fees and debt. The two consumers may be observationally equivalent, and policy responses will have opposing effects on each group.

This paper develops a new taxonomy of responses to potential mistakes. In designing regulations, policymakers face choices along two underappreciated dimensions: (1) between separating approaches that attempt to separate consumers’ choices accurately along their preferences, and pooling approaches that allow or require consumers to be pooled into a single choice even when preferences differ, and (2) between distributing decision-making at the individual consumer level and concentrating decisions through intermediaries or rules. The decision to separate or to pool is a first-order functional choice that logically precedes other formal aspects of policymaking (standards vs. rules, taxes vs. regulations, etc.).

This paper analyzes the inevitable tradeoffs in choosing among the four categories of regulatory responses revealed by this taxonomy. For example, all things equal, separating strategies may be preferable because they give people what they really want. In practice, however, the process of matching will be difficult and/or costly. The tradeoff between distributed and concentrated solutions may have largely to do with whether we think information asymmetries, which often exist in both directions in markets for financial products, are worse for the consumer or for the institutions offering financial products. Systematizing the tradeoffs through this taxonomy is more analytically neutral than the conventional arguments raised by interventionists and non-interventionists, who rely on often unresolvable claims about institutional competence and the level of externalities in a particular market.

Sixth Circuit Enforces TCPA

In an opinion yesterday called Imelhoff Investments v. Alfoccino, Inc., the U.S. Court of Appeals for the Sixth Circuit rejected arguments that would limit the liability of senders of junk faxes under the Telephone Consumer Protection Act (TCPA).

First, the court held that a plaintiff's standing in a junk fax case doesn't depend on whether it printed out a fax that was sent to it. That's an important holding because with new technology many faxes don't find their way onto paper. (For example, I have my home office fax machine set to notify me of faxes but not print them out.) The court recognized that receiving an unsolicited fax injures people in ways other than the waste of paper and ink, and held that Congress could appropriately allow people to sue over faxes they never printed.

Second, the court held that under the TCPA as implemented by FCC regulations, someone who has a fax advertisement for their business sent by a contractor or other third party is directly liable as a principal if the fax violates the TCPA. The court noted that the FCC rules treat telemarketing voice calls differently by differentiating between the telemarketer who places the call, who is directly liable, and the seller on whose behalf the telemarketer calls, who is vicariously liable. The court expressed some uncertainty as to why the FCC had treated faxes and calls differently in this regard, but said that didn't matter because a challenge to the regs was not before it.

Is the FTC doing enough to stop mysterious hotel ‘resort fees’?

The Washington Post reports:

No one knows exactly how much money hotels extract from resort guests in fees. A recent study by New York University found that hotels and resorts collected $2.25 billion in surcharges last year, but the number includes other add-ons. We do know that virtually no hotels disclose the fees in their initial online rate quotes. At best, you have to click to another screen to get the “all-in” price, including the mandatory resort fee; at worst, you don’t find out about it until you check out. Customers also complain that hotels don’t tell them about the fees when they make hotel reservations.

The full story is here.

Glass-Steagall for the 21st century

One of the many New Deal reforms enacted to help prevent another Great Depression was a requirement that the financial industry keep its commercial investment activities separate from its basic depository and lending activities so as to prevent the risks of the former from jeopardizing the latter. Congress, unfortunately, repealed that law (known as "Glass-Steagall," after its authors) in 1999. Less than ten years later, the economy was in crisis again.

This week, in an encouraging development, a bipartisan group of senators has proposed that Congress reinstate the crucial safeguards of Glass-Steagall. The Hill has the story; Public Citizen has this laudatory press release.