Consumer Law & Policy Blog

Four companies agree to stop falsely promoting personal-care products as “all natural”

The Federal Trade Commission announced yesterday:

Four companies that market skin care products, shampoos, and sunscreens online have agreed to settle Federal Trade Commission charges that they falsely claimed that their products are “all natural” or “100% natural,” despite the fact that they contain synthetic ingredients. The Commission has issued a complaint against a fifth company for making similar claims.

Under the proposed settlements, each of the four companies is barred from making similar misrepresentations in the future and must have competent and reliable evidence to substantiate any ingredient-related, environmental, or health claims it makes.

The products include shampoo, sunscreen, and moisturizer. Details, including the names of the companies and their products, are here.

Robocall scam for tax season

Companies pretend to be from the IRS and represent that you're in big, big trouble. (I've gotten a couple of these myself this month.)

Ars Technica has the details.

Is trouble brewing for the CFPB in the D.C. Circuit?

In this article, Zoe Tillman describes an oral argument today in the D.C. Circuit involving a challenge to the Consumer Financial Protection Bureaus's structure. Specifically, the challengers say that Congress gave the CFPB's director too much power and independence. Tillman says that the D.C. Circuit appears to agree with the challengers:

A federal appeals panel in Washington on Tuesday appeared ready to disrupt the organizational structure of the Consumer Financial Protection Bureau, which vests power in the hands of a single director. During arguments in the U.S. Court of Appeals for the D.C. Circuit in a challenge to the constitutionality of the consumer agency, the question appeared to be not whether the judges would alter the bureau’s structure, but rather how much. The judges pressed the bureau’s lawyer to defend the novelty of the CFPB’s structure and why it didn’t violate separation of powers. A single director heads the bureau, and the president’s ability to remove the director is limited. It is “very dangerous in our system” to vest so much power in one person, Judge Brett Kavanaugh said during arguments. The three-judge panel could declare the bureau’s structure unconstitutional in its entirety, or the judges could chip away at a smaller piece—by expanding the president’s authority to remove the director, for instance.

Goldman to pay $5 billion for selling bad mortgages

This week's settlement between the financial giant and the government is the latest in a string of billion-dollar settlements addressing Wall Street misconduct in the lead-up to the financial crisis of 2008. (The others were with JPMorgan Chase, Bank of America, Citibank, and Morgan Stanley, and the values ranged from approximately $3 billion to $16 billion.)

Like the other settlements, no individuals will be held accountable. As Public Citizen President Rob Weissman argues in response to the settlements, "Without criminal prosecution, there’s not even the illusion of accountability." Read his statement here.

The Washington Post reports on the settlement.

Company will break its own product instead of updating the technology

A company called Nest makes an electronic hub (the Revolv hub) that enables consumers to control the lights in their home remotely. Customers buying the product were promised "free lifetime service subscription."

But next month, the Revolv hub will become inoperable, thanks to Nest itself. Why? Because the company prefers to put its resources toward a newer product and stop updating the Revolv hub. Customers who have the hub are just out of luck, as Vox reports:

Nest isn't just going to stop providing software updates or security fixes for the Revolv hub. It's going to deliberately make these devices totally useless. If you made the mistake of buying a Revolv hub to control lights in your house, you're going to have to buy a replacement device or else you'll no longer be able to control your lights from your smartphone, and — depending on how things are set up — you might not be able to turn them on at all.

Read more from Vox here -- including the persuasive argument that Nest should pay its customers for breaking their light system.

Bill Introduced to Stop Pre-dispute Arbitration for Consumers and Small Businesses

The Restoring Statutory Rights Act of 2016, sponsored by Democratic Senator Patrick Leahy, was sent to congressional committee on February 4, 2016 for consideration. The proposed legislation declares that the FAA “did not, and should not have been interpreted to, supplant or nullify the legislatively created rights and remedies which Congress . . . has granted to the people of the United States for resolving disputes in State and Federal courts.” It would amend Section 2 of the FAA to provide an exception to enforcement of a provision that “requires arbitration of a claim for damages or injunctive relief brought by an individual or Small Business . . . arising from the alleged violation of a Federal or State statute, the Constitution of the United States, or a constitution of a State, unless the written agreement to arbitrate is entered into by both parties after the claim has arisen and pertains solely to an existing claim.” The law would also clarify that grounds to revoke an arbitration agreement exist where the agreement is contrary to state law. The determination of whether an agreement to arbitrate is valid would be left to the court, rather than the arbitrator — “irrespective of whether the party resisting arbitration challenges the agreement to arbitrate specifically or in conjunction with other terms of the contract containing such agreement.”

Business Lawyer Survey of Consumer Auto Finance Developments

Kevin M. McDonald of VW Credit Inc., and Kenneth J. Rojc of Nisen & Elliott, LLC have written the Business Lawyer's annual survey of consumer auto finance developments, this year called Automotive Finance: The Regulatory Cup Spilleth Over.  Here is the abstract:

Almost every aspect of the life cycle of retail contract and lease transactions, from marketing and account originations to servicing and collections, has received heightened regulatory attention during the past year (2015), since our previous Survey. This Survey highlights the most significant developments since the spring of 2015, including the Bureau of Consumer Financial Protection’s (“CFPB”) enactment of a larger market participant rule and the expansion of its Examination Procedures for automobile finance lenders. On the fair lending front, this Survey addresses consent orders entered by the U.S. Department of Justice (“DOJ”) with American Honda Finance Corporation (“AHFC”) and Evergreen Bank Group (“Evergreen”); the CFPB’s white paper on the proxy methodology it uses in fair lending cases; and its announcement that consumers subject to alleged credit discrimination by Ally Financial, Inc. and Ally Bank (“Ally”) will be receiving instructions on how to apply for restitution. On the servicing front, this Survey examines enforcement actions by the CFPB against First Investors Financial Services Group, Inc. (“First Investors”) in connection with credit reporting activities and Security National Automotive Acceptances Company (“SNAAC”) related to collection activities involving servicemembers. This survey also reports on the New York Attorney General’s enforcement actions against vehicle dealers’ with regard to their sale and financing of ancillary products.

John Oliver on Credit Reports

 

The bizarre afterlife of an internet mapping glitch

Read this story from Fusion about the Kansas farm that had the misfortune to be located near the geographic center of the country and became the "default" location for unlocatable IP addresses in the United States. What did that mean in practice? People who got scammed on the internet tended to think this farm was the source of their trouble. Which, in turn, caused a lot of trouble for the residents of the farm.

In odd twist on minimum wage fight, union fights to pay union workers... less?

Unions have successfully pushed counterintuitive carve-outs to minimum wage hikes in California permitting employers to pay union workers less than other workers. Union leaders say they are trying to make unionization more attractive to employers. But union members aren't pleased.

The L.A. Times explains.