Consumer Law & Policy Blog

Public Citizen report on Chamber of Commerce and the CFPB

In a report released last week, Public Citizen documents how the Chamber is trying to thwart the work of the CFPB in areas such as credit card regulation and protecting service members from predatory lending.

Read the report, "Undermining the CFPB," here.

Montana Standard Will Honor Its Previous Commitments to User Privacy

by Paul Alan Levy

Last month I criticized a Butte, Montana newspaper which, having decided to switch on January 1, 2016, from a commenting system that allowed users to choose pseudonyms to one that will demand the publishing of real names, announced that the “real names” of those who had previously commented using pseudonyms would be placed retroactively on all comments posted before that date, unless users contacted the Montana Standard to ask to have their comments removed.  I argued that the imposition of such a retroactive, opt-out disclosure was an outrageous betrayal of trust; I also pointed out some flaws in the way it operated its real-name system.  As criticism spread across the blogosphere, it became apparently that the retroactive change might even create liability for breach of contract because its Privacy Policy promised (and still promises) users that if the privacy policy loosens, the company would not use information acquired under the current terms in the new, looser way.

I am pleased to note (thanks to Wendy Davis for reporting on this change) that the Montana Standard has abandoned its plan to out anonymous speakers by default, but rather to delete their comments by default.   The announcement of the new approach did not acknowledge the potential for liability, but acknowledged only that "such a change would not be fair to those who are either unaware of the pending change or have not contacted us." 

Consumer Review Freedom Act passes Senate

By unanimous consent, the Senate yesterday passed a law to ban non-disparagement clauses in consumer contracts. Public Citizen supports the Consumer Review Freedom Act, which addresses a problem we've litigated and advocated against on many occasions, including most notably in the KlearGear case.

Here's a discussion of the Senate Commerce Committee hearing on the bill last month, at which Public Citizen client and KlearGear plaintiff Jen Palmer testified. (In that post, I identify a concerning aspect of the draft bill, but that provision has since been removed.) You can read Jen's testimony here and Public Citizen's testimony here.

And here's the Consumerist reporting on the Senate's passage of the bill yesterday.

A parallel measure is pending in the House, as we've previously noted. On Twitter, one of the House sponsors today urged committee action on that bill.

A small Supreme Court arbitration case

Over the past few years, we've seen sweeping arbitration decisions from the Court like Concepcion and Italian Colors making it much harder for plaintiffs to avoid forced arbitration and get their day in court. By contrast, this week's arbitration case (a loss for the consumer, as is typical) is of far less consequence.

DirecTV v. Imburgia was about a pre-Concepcion TV service contract that included a binding arbitration clause with an exception if "the law of your [i.e. the consumer's] state" makes such a clause unenforceable. That exception described California law prior to the Supreme Court's 2011 decision in Concepcion holding California contract law on this subject preempted by the Federal Arbitration Act. The question the Supreme Court answered here was whether the parties' pre-Concepcion contractual term still incorporated pre-Concepcion California law on arbitration. A 6-3 majority answered no, holding that as a matter of ordinary meaning, California law itself, and the FAA, "the law of your state" must refer only to valid state law, not law that turned out to be invalid because of the FAA. In the principal dissent, Justice Ginsburg criticized not only the narrow holding here but the Court's entire line of decisions extending special protection to arbitration clauses: "These decisions have predictably resulted in the deprivation of consumers’ rights to seek redress for losses, and, turning the coin, they have insulated powerful economic interests from liability for violations of consumer protection laws."

Fortunately, today's decision is likely to be limited in scope, because the rule of law to which DirecTV's contract referred is an anachronism after Concepcion. Or, put another, more depressing way: Concepcion was sufficiently sweeping that in this week's decision the Court had little left to do.

 

A latent obstacle for the Affordable Care Act

The New York Times and Washington Post both discuss how a little-noticed provision in a federal spending bill last year is creating problems for the implementation of the ACA. (According to the Times, it has "has tangled up the Obama administration, sent tremors through health insurance markets and rattled confidence in the durability of President Obama’s signature health law.")

The provision limits payment to insurance companies for what are called "risk corridors," which (the Times explains)

were intended to help some insurance companies if they ended up with too many new sick people on their rolls and too little cash from premiums to cover their medical bills in the first three years under the health law. ... The payments were supposed to help insurers cope with the risks they assumed when they decided to participate in the law’s new insurance marketplaces. ... [W]ithout them, insurers say, many consumers will face higher premiums and may have to scramble for other coverage. Already, some insurers have shut down over the unexpected shortfall.

See the Times coverage here and the Post coverage here.

Cert. grant about use of state letterhead by private debt collector

Today the Supreme Court granted cert. in Sheriff v. Gillie, an FDCPA case out of the Sixth Circuit. As described by the court of appeals:

Plaintiffs brought this action under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., alleging that Defendants utilized a deceptive, misleading, or false representation or means in attempting to collect consumer debts Plaintiffs owed to entities owned and operated by the State of Ohio. The Attorney General intervened on behalf of Defendants, asserting that the alleged misrepresentation—consisting of sending debt-collection notices on the Attorney General’s letterhead—was not a misrepresentation at all and was, in fact, authorized by the Attorney General.

Here’s the Sixth Circuit’s summary of its decision:

Because a jury could reasonably find that the use of the Ohio Attorney General’s letterhead by the “special counsel” acting as independent debt collectors, in the manner and under the circumstances present here, to result in deceptive, misleading and false representations in violation of the Fair Debt Collection Practices Act, we hereby VACATE the summary judgment in favor of Defendants and REMAND this case to the district court with instructions for the district court to submit to the jury the question as to whether these letters were actually confusing to the least sophisticated consumer.

The questions presented in the petition are:

1. Are special counsel—lawyers appointed by the Attorney General to undertake his duty to collect debts owed to the State—state “officers” within the meaning of 15 U.S.C. § 1692a(6)(C)?
2. Is it materially misleading under 15 U.S.C. § 1692e for special counsel to use Attorney General letterhead to convey that they are collecting debts owed to the State on behalf of the Attorney General?

Argument will likely be scheduled this spring.

Report alleges misleading practices by T-Mobile

A project of the Change to Win labor federation called "Calling Out T-Mobile," is doing just that in a new report and website. The focus, as explained on the site:

The Un-Carrier marketing platform makes two central claims that are misleading:

T-Mobile claims to offer service plans with “No Annual Contract”.

T-Mobile say it pays consumers’ early termination fees (ETFs) or equipment installment plans (EIPs) if they switch from a competing carrier. Both of these claims misrepresent fundamental facts about the underlying terms and conditions, causing consumers to be deceived and harmed.

Check out the site here. The report is here.

WTO penalizes U.S. for country-of-origin labels for meat

Amidst the debate over the TPP, the WTO this week showed us how much power trade deals can confer on international bodies to interfere with national legislation. Specifically, the WTO has ruled that Canada and Mexico can impose $1 billion worth of tariffs because of a U.S. regulation, in place since 2009, requiring country-of-origin labels (COOL) for beef, pork, and other livestock. According to the WTO, the rule discriminates against livestock from Canada and Mexico. As the Wall St. Journal notes,

U.S. consumer groups have long argued that country-of-origin labels can help shoppers avoid food from countries with lax safety regulations. The labeling effort, which gained traction in Congress in the early 2000s after mad-cow disease was found in British cattle, drew support from some U.S. ranching groups.

In response to the WTO's ruling, efforts are underway in Congress to repeal the COOL rule, the Journal reports.

Read the full story here.

Wyndham settles FTC charges that it failed to protect consumers’ credit card information

The Federal Trade Commission has announced that Wyndham Hotels and Resorts has agreed to settle FTC charges that the company’s security practices unfairly exposed the payment card information of hundreds of thousands of consumers to hackers in three separate data breaches.

Under the terms of the settlement, the company will establish a comprehensive information security program designed to protect cardholder data – including payment card numbers, names and expiration dates.  In addition, the company is required to conduct annual information security audits and maintain safeguards in connections to its franchisees’ servers.

The FTC press release is here.

Fiat Chrysler fined $70 million for failing to report safety data

NPR reports:

The National Highway Traffic Safety Administration has imposed a $70 million civil fine on the parent company of Chrysler for failing to report safety data.

A statement from the agency said Fiat Chrysler Automobiles, or FCA, has acknowledged that it failed to turn in "early warning report" data about accidents, warranty claims and safety issues. The data are used to identify potential defects that could lead to a recall, the agency said.

NPR's full story is here.