Consumer Law & Policy Blog

How should consumers pick a doctor?

...is the question posed in today's piece from NPR's Morning Edition today. The story covers a new partnership between Yelp and ProPublica to integrate ProPublica data into Yelp doctor reviews. One of the difficulties in Yelp reviews of doctors is that they often focus on the rudeness or efficiency of the office staff rather than the quality of the medical treatment. That may be understandable, given that the average person may not be in a position to second-guess her doctor's medical advice. And in some cases a difficult staff might be an important factor in choosing a doctor. But does it help consumers find the best medical care?

The story is worth a listen, here.

Second Circuit: NYC's regulation of debt collectors not preempted by New York state law

In 2009, New York City expanded its regulation of debt collectors to include "a buyer of delinquent debt who seeks to collect such debt either directly or through the services of another by, including but not limited to, initiating or using legal processes or other means to collect or attempt to collect such debt." A law firm engaged in debt collection sued to enjoin the law, arguing that it was preempted by the state power to regulate attorneys. The district court granted summary judgment to the plaintiff law firm on that claim. On appeal, the Second Circuit certified to the New York Court of Appeals the question whether NYC's law impinged on state power to regulate attorneys. In June, the Court of Appeals said it didn't. Accordingly, yesterday the Second Circuit reversed the district court and upheld the local regulation. The decision in Berman v. City of New York is here.

California Supreme Court Upholds Arbitration Clause Banning Class Actions

    In a decision issued Monday in a case called Sanchez v. Valencia Holding Co., the California Supreme Court rejected arguments that a class-action ban in an arbitration clause, together with a few other provisions that were unfavorable to a consumer, rendered the arbitration clause unconscionable. The opinion emphasized that an arbitration clause, like any other contract, may be challenged on unconscionability grounds, and that the unconscionability standard must be "the same for arbitration and nonarbitration agreements." The Court acknowledged as well that under the Supreme Court's decision in Concepcion, a class action waiver cannot itself be held unconscionable. The other provisions at issue in the clause, the court concluded, did not render it so unfair as to be unconscionable.

    The decision is the latest indication that the California Supreme Court is not reflexively hostile to arbitration and is attempting to follow Concepcion while preserving reasonable state contract-law principles that may render some arbitration agreements unenforceable even under Concepcion. The decision also may have some relevance to the U.S. Supreme Court's consideration of the pending case DIRECTV v. Imburgia, where a California court held that when a contract explicitly adopted California law as to whether a class-action waiver was enforceable, California law would govern that issue consistent with the language of the contract. Sanchez illustrates that the California courts would have reached a different result had the contract not selected California law to govern the enforceability of the class-action waiver. The decision thus gives the lie to the arguments of DIRECTV and its supporting amici that the California courts are on a mission to hold class action waivers unenforceable irrespective of the intention of the parties to an arbitration agreement.

How Not to Write a Cease and Desist Letter — Part II

by Paul Alan Levy

Several years ago, the notorious Hollywood mouthpiece Martin Singer sent a demand letter to the San Diego Reader, in reaction to its having inquired about a pending law suit, threatening to sue it in the event that any story it might write about the subject of the inquiry and further threatening to file a lawsuit in the event that its demand letter was published.  The Reader not only published the story but also made the demand letter the focus of a separate story, while incidentally repeating the allegations that Singer was so anxious to suppress.  So far as I know, Lavely & Singer never followed up on the threat to sue either for copyright infringement or for defamation.

Yesterday, the online gossip site Lipstick Alley received a demand letter from one of Singer’s staffers, Allison S. Hart.  Hart objects to a handful of posts about actor Jared Leto’s alleged affinity for rough sex and about the size of a certain part of his anatomy (here and here) and warns that if Lipstick Alley does not remove the posts immediately, both it and its users face imminent legal action and “millions of dollars in liability.”   Given that all of the posts are more than eighteen months old, far beyond the statute of limitations, and that Lipstick Alley is plainly immune from suit under section 230 of the Communications Decency Act, the threat of litigation is a joke.    My response to her letter points out these and several other reasons why her threatened lawsuit cannot possibly succeed.  And, considering that she is apparently threatening to file suit in California court, such a lawsuit would likely cost her client substantial fees under that state’s anti-SLAPP statute.

FTC Slams Credit-Repair Scam

    The FTC's press release is here.

Facebook and Your Credit

    News reports in the last day reveal that Facebook has obtained a patent on a method for "authenticating an individual for access to information or service based on that individual's social network." What exactly does that mean?

    Among other things, the patent says, the invention could be used by lenders as follows: "When an individual applies for a loan, the lender examines the credit ratings of members of the individual's social network who are connected to the individual through authorized nodes.  If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application.  Otherwise, the loan application is rejected."

    Wow. Could lenders really use the credit of a person's Facebook friends to deny that person a loan? The CNN Money report linked to above points out that denying credit for that reason might violate the Equal Credit Opportunity Act. In addition, accessing a consumer's credit report (without her consent) in order to determine the creditworthiness of another consumer probably wouldn't be a legitimate business reason for access under the Fair Credit Reporting Act. Thus, under the current state of U.S. law, Facebook's invention may not actually be usable for loan processing.

    So you probably don't need to ask the next person who wants to be your Facebook friend to tell you his credit score. Yet. 

Jeff Gelles: New-Style Credit Cards Will Leave Consumers Vulnerable

Here.

Today's Laugh

HT: Kate Spellman

CFPB announces lawsuit against offshore payday lender

The Bureau's release explained yesterday that it is:

filing [] a lawsuit in federal district court against the NDG Enterprise, a complex web of commonly controlled companies, for collecting money consumers did not owe. The CFPB alleges that the defendants illegally collected loan amounts and fees that were void or that consumers had no obligations to repay, and falsely threatened consumers with lawsuits and imprisonment. The CFPB is seeking to end the companies’ alleged illegal practices and obtain monetary relief for consumers.

“We are taking action against the NDG Enterprise for collecting money it had no right to take from consumers,” said CFPB Director Richard Cordray. “Companies making loans within the U.S. have to comply with federal law, and the Consumer Bureau will work to ensure that American consumers receive the protections and fair treatment they deserve.”

Read the whole release here.

Coalition Against Insurance Fraud launches educational podcast

This non-profit organization, which brings together consumer organizations (such as Consumer Federation of America and National Consumers League), governments and insurance organizations, aims to educate the public and expose fraud.

Now it's launched a podcast, with the first three episodes covering home contractors, tow-trucks, and medical ID theft. You can check it out here.