Consumer Law & Policy Blog

LA Times's David Lazarus Replies to GOP Presidential Candidates on CFPB

by Jeff Sovern

Here. Some excerpts: First, the attacks:

Ben Carson, second only to Donald Trump in Republican presidential polling, has called the Consumer Financial Protection Bureau the "ultimate example of regulatory overreach."

Candidate Carly Fiorina, former chief executive of Hewlett-Packard, says the watchdog agency's investigative powers worry her "a whole lot more" than the National Security Agency.

And Texas Sen. Ted Cruz, also seeking the Republican nomination, introduced legislation in July that would erase the bureau from existence.

"The agency continues to grow in power and magnitude without any accountability to Congress and the people," he warned. "The only way to stop this runaway agency is by eliminating it altogether."

And now some of Lazarus's response:

Despite the ominous, fearful and largely bogus criticism by its Republican critics, the bureau has been steadily doing what it was created to do: safeguarding consumers from the greedy practices of businesses that think they can act without regard for the law.

* * *

In the four years since its founding, the Consumer Financial Protection Bureau has, among other actions:

•Forced credit card companies to return nearly $2 billion to consumers who were duped into signing up for costly add-on programs such as unneeded identity theft or disability coverage.

•Required that mortgage lenders verify in advance that a borrower can repay a loan. The subprime mortgage crisis during the Great Recession was precipitated in part by lenders irresponsibly handing out cash to almost anyone who applied.

•Helped secure $480 million in debt forgiveness for students saddled with high-priced loans from Corinthian Colleges Inc. For-profit Corinthian filled for Chapter 11 bankruptcy protection in May and closed dozens of schools.

* * *

I'm not sure what Republicans mean when they complain about the bureau's "regulatory overreach" or describe it as a "runaway agency."

Any reasonable observer would think these guys seem pretty darn good at their jobs.

I can't do the column justice here, but if you are interested enough to have read this far, you should click on the link above and read the whole thing.

 

Who Gets To Benefit From Bankruptcy Protection?

by guest blogger Rachel Clattenburg of Public Citizen Litigation Group

Last week, NPR’s Morning Edition described Chapter 11 bankruptcy as one of our economy's “secret weapons.” The story focused on an appliance business in Charlotte, N.C., which was saved after filing for Chapter 11 bankruptcy. The story credits Chapter 11—the Chapter generally used by businesses to reorganize and pay back creditors over time—as one reason the U.S. economy bounced back faster than some others.

Does consumer bankruptcy provide a similar bounce-back effect? A paper published earlier this year tried to figure this out for Chapter 13 bankruptcy protection. In Chapter 13, a personal bankruptcy chapter, the individual keeps her assets and repays creditors from future income over a span of three to five years.

The researchers, exploiting the fact that bankruptcy judges vary in their leniency, compared Chapter 13 filers who were granted bankruptcy protection to nearly identical filers whose cases were dismissed. In the five years post-filing, those granted Chapter 13 protection earned significantly more and experienced increased employment, lower home foreclosure rates, and even lower mortality rates compared to those whose cases were dismissed. The paper suggests that the results may be due to “increased incentive to work and increased economic stability following the receipt of bankruptcy protection.”

So far, so good: individuals, like corporations, get to enjoy the benefits of bankruptcy protection. However, the study examined filings before the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act went into effect. That law made it harder for consumers to file for bankruptcy protection and led to a “large and permanent reduction in bankruptcy filings,” according to a report by the Federal Reserve Bank of New York, which attributed the decline to the increased cost of seeking bankruptcy protection. That report found a “sizeable group of individuals” who were too poor to afford bankruptcy protection.

Virginia attorney general to crack down on shady car-title lending practices

Both enforcement and public education are on the agenda for the Commonwealth's Attorney General Mark Herring. Listen to the NPR story here.

Major Chicago Conference: Contracting Over Privacy

The Journal of Legal Studies is holding a conference at the University of Chicago titled "Contracting Over Privacy" on October 16 & 17.  The conference features an all-star lineup. Here's the conference blurb:

Information privacy is rapidly emerging as one of the key areas of consumer protection in our era. This conference will examine the role of contract in policing information privacy. Are private contracts an efficient regulatory tool of data privacy? Should the law incorporate mandatory protections, not waivable by consumers? Can disclosures effectively inform consumers about firms’ data practices?

More information here.  (HT: ContractsProf Blog).

Watch this video and find out whether you can share a Coke with obesity

Recently, we told you about Coca-Cola's funding of scientists seeking to shift the blame for obesity away from bad diets (including regularly gulping down sugary drinks like Coke).

If you were interested in that story, you'll be interested in this story.

At this website, Coke urges consumers to "Share a Coke" with someone by allowing them to buy a bottle of Coke with a name on it. You provide the name, along with 5 bucks plus shipping, and Coke will send you a bottle emblazoned with the words "Share a Coke with [you name it]." Or so the company says. Turns out the "you name it" has to be on the company's "approved list."

So, does Coke allow consumers to share a Coke with obesity? Click here or on the embedded video below to find out.

 

"Why the FTC, America’s top privacy regulator, actually hates a privacy bill everyone else seems to want"

A Washington Post online story today discusses the Federal Trade Commission's opposition to proposed amendments to the Electronic Communications Privacy Act:

By now, Americans are all too familiar with the ways hackers can gain unauthorized entry into their personal accounts online. But did you know that the government can currently seize many of your e-mails without even getting a warrant?

That's the result of a gaping loophole in a nearly 30-year-old law known as the Electronic Communications Privacy Act. Despite its name, ECPA doesn't do as much to protect your information as you might think. E-mails that have been sitting in your inbox for more than six months can, under the law, be seized by federal officials with little more than a request to your e-mail provider. It's a holdover from the time before cloud storage made it easy to archive your entire life online.

Now, Congress is on the cusp of finally updating the law. But one unexpected critic of the proposed changes is the agency that's become the nation's biggest privacy watchdog, the Federal Trade Commission. But in Senate testimony Wednesday, the FTC cautioned Congress against going too far with ECPA reform. If the FTC is worried about not being able to do its job as a result of the changes on the table, what does it have in mind instead? A series of carve-outs and exceptions that would still allow law enforcement to compel data from Internet companies under certain conditions, such as if the subject of an investigation refuses to hand over the information himself. Privacy advocates Wednesday said that amounted to little more than the status quo, and accused the agencies of dragging their feet on meaningful reform.

The full piece is here.

You Don’t Have to Be a Brain Surgeon to Understand How Silly Ben Carson’s Legal Threats Are

You would probably assume that Ben Carson and his presidential campaign would be thrilled that so many people across America are creating T-shirts, mugs and other items touting his candidacy for the presidency, saying “Ben Carson for President 2016" or using more creative slogans, plastering his face on such items. And you would think that his campaign has better ways to spend its money than hiring a pseudo-IP law specialist to threaten people who are offering such items.

But if you entertained such thoughts, you would be wrong. Last Thursday, one K. Clyde Vanel, whose law firm’s web site portrays him an IP law expert, sent a demand to CafePress, claiming that the items that come up on a search of CafePress’s web site using the search string "Ben Carson gifts" constituted “trademark infringement, copyright infringement, misappropriation of name and likeness, privacy rights infringement.” He went on to tell CaféPress, “The aforementioned action is a violation of the Digital Millennium Copyright Act, The Lanham Act, Federal Trademark Infringement, Federal Copyright Infringement, state misappropriation and privacy laws.” And he concluded with a demand, in all capital letters, that all “unauthorized Ben Carson for President products” be removed from the CafePress site.

But the legal claims are those of a buffoon. Supporting Ben Carson’s candidacy invades his privacy? The phrase “Ben Carson for President” is copyrightable? Nobody else can utter those words lest they infringe his trademark or violate his right of publicity?

The Hill: Grassley to roll out student loan bill

Here. Excerpt:

Under Grassley's legislation, all students who are going to take out a federal loan to help pay for college would have to undergo counseling that would include an estimate of how much the student will likely make upon graduating versus their loan debt. Students would also look at potential options for scholarships or work to help offset costs. * * *

* * * [Grassley] added that the "federal government ... has a responsibility to at least ensure that students know what they’re getting themselves into before they get in over their heads. " 

Drug development to combat rare diseases

The FDA recently issued this draft guidance to assist industry in drug development to combat rare diseases.

10% of people will get a rare disease. That sounds strange because a rare disease is, well, rare. It is defined (by the Orphan Drug Act of 1983) as a disorder or condition that affects fewer than 200,000 people in the U.S., and most rare diseases affect far  fewer people. The reason so many people get rare diseases is that there are a lot of rare diseases -- 7,000 in total.

The challenges to develop drugs to treat rare diseases are great. As the FDA explains, the problems are not just financial. Because relatively few people suffer from rare diseases, medical understanding of the diseases lag and there tend to be few definitive study results that demonstrate potential treatments are safe and effective.

 

CFPB sues over illegal debt-relief scheme that took $67 million from 21,000 consumers

The Consumer Financial Protection Bureau on Monday obtained a preliminary injunction against World Law Group and its senior leaders for running a debt-relief scheme that the CFPB alleged charged consumers exorbitant, illegal upfront fees.

The CFPB alleges the debt-relief scheme falsely promised consumers a team of attorneys to help negotiate debt settlements with creditors, failed to provide legal representation, and rarely settled consumers’ debts. World Law is alleged to have taken $67 million from at least 21,000 consumers before providing any debt-relief services. The preliminary injunction order halts World Law’s operations and freezes the defendants’ assets while the case is pending.

Details and a link to the order are available from the CFPB, here.