Consumer Law & Policy Blog

What does it take to get a gag order in the Southern District of New York?

by Paul Alan Levy

Not much, it appears.  

Following up on the recent spate of stories about a grand jury subpoena that the United States Attorney’s office for the Southern District of New York had issued to Reason Magazine, demanding the identities of the authors over several commenters who called for the execution of a federal judge in that district, and about a subsequent gag order that forbade Reason from telling anybody about the subpoena, I asked Assistant United States Attorney Niketh Velamoor for his office’s consent to a motion to unseal the application for the gag order, invoking the First Amendment and common law right of access to judicial records.  I wanted to see the basis for requesting the gag order – the factual showings that supported its issuance – because the order itself was so cursory in reciting the statutory factors and saying that “one or more of [them]” was the basis for issuance.

Velamoor’s initial response was unhelpful, but he later called me back to ask me to explain the legal basis for the demand; once he understood what the law is (and, presumably, he figured out that Public Citizen has a track record of litigating unsealing issues), he asked the court to unseal the application and sent it to me.   He assured me that there was no oral hearing on the application, hence no basis for a motion to unseal a transcript.

Whole Foods tries a Hail Mary

By Stephen Gardner

According to a story in Food Navigator, Whole Foods filed a motion to dismiss (Download Motion to Dismiss) a lawsuit over the chicanery of its using the FDA-Disapproved term "Evaporated Cane Juice" instead of calling it what it is, "Sugar," because consumers intuitively understand that evaporated cane juice is sugar.

I assume Whole Foods will put on consumer evidence from a wishing well and a Ouija board as well as this baldfaced assertion, which begs the question why Whole Foods didn't just call it sugar so that its consumers don't have to rely on their intuitions.

FTC reaches $54 million settlement over payday loans

The USA Today reports, "The operators of a payday lending scheme that allegedly bilked millions of dollars from consumers nationwide have agreed to more than $54 million in tentative settlements with the Federal Trade Commission." The scheme, which affected approximately 400,000 consumers, involved a variety of misrepresentations and unauthorized deposits and withdrawals.

Read more here.

CVS Health is quitting the Chamber of Commerce because of the Chamber's stance on tobacco control

Wow. Go here.

CFPB report on servicemembers' problems with student loans

The Consumer Financial Protection Bureau today put out a report about problems with student loan servicing in the military.

Among the problems identified:

• Military deferments are denied without adequate explanation, applied in a haphazard way, and, in some cases, are approved verbally but never applied to military borrowers’ accounts, resulting in late fees, defaults and debt collection.

• Application of Servicemembers Civil Relief Act (SCRA) protections continues to be an unnecessary struggle for servicemembers. Servicers still do not appear to understand the elements of the SCRA.

• Military families struggle with disability discharge, including potential negative credit reporting consequences. They also are unsure whether the benefit is available for private student loans as well as for federal student loans. The uncertainty extends to co-signers looking for the same protections after the disability or death of a primary borrower.

• In addition to the loss of protections specific to military borrowers, complaints also demonstrate how servicing breakdowns can impact financial and military readiness.

No time to read the full report? The Hill has the story.

Study finds heavier, more expensive cars are safer in crashes

Read about a University of Buffalo study that found that

vehicle type, curb weight and price are all significant predictors of personal injury cost. For every additional $10,000 you spend, injuries go down by almost 12 percent. We also found that for every 1,000-pound increase in weight, vehicles were 19 percent safer. ... [S]ome of the most popular cars on the road fell into the least safe category. For example, the 2-door Honda Accord and the 4-door Honda Civic were both rated at about 40 percent and 30 percent less safe than the average, respectively, while the 4-door Toyota Corolla was more than 50 percent less safe than average.

These findings are at odds with some government crash-test ratings, which, the study's authors say, don't take into account the real-world effect of multi-car crashes.

“We found that vehicle type, curb weight and price are all significant predictors of personal injury cost,” said Jehle. “For every additional $10,000 you spend, injuries go down by almost 12 percent. We also found that for every 1,000-pound increase in weight, vehicles were 19 percent safer. - See more at: http://www.buffalo.edu/news/releases/2015/05/023.html#sthash.bYYBgJDn.dpuf

“We found that vehicle type, curb weight and price are all significant predictors of personal injury cost,” said Jehle. “For every additional $10,000 you spend, injuries go down by almost 12 percent. We also found that for every 1,000-pound increase in weight, vehicles were 19 percent safer. - See more at: http://www.buffalo.edu/news/releases/2015/05/023.html#sthash.bYYBgJDn.dpuf

For every additional $10,000 you spend, injuries go down by almost 12 percent. - See more at: http://www.buffalo.edu/news/releases/2015/05/023.html#sthash.bYYBgJDn.dpuf

For every additional $10,000 you spend, injuries go down by almost 12 percent. - See more at: http://www.buffalo.edu/news/releases/2015/05/023.html#sthash.bYYBgJDn.dpuf

For every additional $10,000 you spend, injuries go down by almost 12 percent. ” - See more at: http://www.buffalo.edu/news/releases/2015/05/023.html#sthash.bYYBgJDn.dpuf

For every additional $10,000 you spend, injuries go down by almost 12 percent. ” - See more at: http://www.buffalo.edu/news/releases/2015/05/023.html#sthash.bYYBgJDn.dpuf

Shark Week campaign to stop predatory lending practices

The Hill reports:

A liberal group that advocates for racial and economic reform is using Shark Week on the Discovery Channel to call attention to predatory payday lending practices.

National People’s Action (NPA) is comparing marine sharks to payday loan sharks who they say trap 12 million Americans in a devastating cycle of debt annually.

On Monday, NPA launched its second annual #Sharkweek Campaign to Stop Predatory Lending Attacks with a petition that asks the Consumer Financial Protection Bureau (CFPB) to crack down on predatory lending practices that cost more than half of all borrowers who renew their loans more in fees than the loans they take out.

The full story is here.

Banking associations challenge Department of Education’s authority to issue “college card agreement” regulations

By guest blogger Jessica Ranucci

In comments filed last week, banking industry groups opposed proposed Department of Education regulations that would crack down on “college card agreements” between universities and banks that affect students who receive Title IV federal education funds. Twenty-five billion dollars in federal Pell Grant and Direct Loan funds is dispersed annually through schools that have these agreements.

In these “college card agreements,” universities provide certain banks advantages in recruiting their students to campus debit and prepaid card accounts. In exchange, the universities receive money or other benefits from the banks. Many students on these campuses then receive the credit balances on their federal loan (used to pay the students’ living expenses) through campus debit and prepaid card accounts at the university’s preferred bank. These accounts often charge very high fees, effectively adding extra charges on federal student loans and limiting the amount students have to spend on living expenses.

The proposed regulations would prohibit schools from requiring student or parents to open a particular account in order to receive their federal credit balance. They would also require schools to inform students that the loan credit can be received in the student’s preexisting bank account and also to make electronic payments into those accounts as timely as the school-linked accounts.

Joint comments submitted by the American Bankers Association, the Consumer Bankers Association, and the Financial Services Roundtable last week allege that the Department of Education does not have the statutory authority to issue these rules. The disagreement centers on the agency’s interpretation of section 487(a)(2) of the Higher Education Act, which the agency interprets as prohibiting schools from charging students any fee for processing federal Title IV aid. The banking associations disagree and assert that the provision should be read much more narrowly.

Surprisingly, the banking associations also argue that the Consumer Financial Protection Bureau has primary authority over consumer protection laws and extensive infrastructure to supervise financial institutions and enforce these laws — implicitly inviting the CFPB to issue regulations for on-campus commercial lending.

Washington Court of Appeals Embraces Rule Requiring Evidence to Identify Anonymous Critics

by Paul Alan Levy

In a decision issued today, the Washington Court of Appeals has embraced the broad consensus among state and federal courts holding that plaintiffs who want courts to force service providers to provide identifying information about anonymous online speakers must both provide notice to the speakers and present evidence of wrongdoing, for example evidence of falsity if the claim is one for defamation, instead of resting on general allegations.

Recent announcements from DOJ's Consumer Protection Branch

July 1, 2015 - Virginia Resident Sentenced to Prison in Connection with Lottery Scheme Based in Jamaica

June 26, 2015 - Former OtisMed CEO Sentenced for Selling Unapproved Surgical Devices

June 26, 2015 - First Jamaican Man Extradited to United States in Connection with International Lottery Scheme Sentenced to Prison

June 22, 2015 - California Man Pleads Guilty in Prescription Drug Diversion Scheme

June 17, 2015 - United States Files Suit against Spectrum Brands for Failing to Report Safety Hazard in Defective Coffeemakers

June 1, 2015 - Two Individuals Plead Guilty to Conspiring to Defraud Consumers through Fraudulent Debt Relief Services Firms

May 28, 2015 - Seller of “Miracle Mineral Solution” Convicted for Marketing Toxic Chemical as a Miracle Cure

May 20, 2015 - ConAgra Subsidiary Agrees to Enter Guilty Plea in Connection with 2006 through 2007 Outbreak of Salmonella Poisoning Related to Peanut Butter

May 14, 2015 - Judge Orders Injunction to Stop Sale of Dangerous Magnets

May 7, 2015 - Three California Men and Minnesota Corporation Indicted in Nationwide Prescription Drug Diversion Scheme

April 29, 2015 - U.S. Citizen Pleads Guilty in Connection with Internationally Based Business Opportunity Fraud Ventures

April 29, 2015 - Black & Decker Agrees to Pay $1.575 Million for Delay in Reporting Hazards in Cordless Electric Lawnmowers

April 27, 2015 - Medtronic Corporation and Executives Agree to Consent Decree to Resolve Allegations of Food, Drug and Cosmetic Act Violations

April 23, 2015 - District Court Enters Permanent Injunction to Prevent Chicago and Two Individuals from Distributing Adulterated Mung Beans and Soybean Sprouts

April 21, 2015 - United States Files Suit against Michaels Stores Inc. for Failing to Report Serious Safety Hazard in Shattering Glass Vases