Consumer Law & Policy Blog

Should the government just give everyone money, no strings attached?

Yes, argue proponents of basic income, the policy proposal to scrap social welfare programs in favor of just cutting everyone a check.

Fivethirtyeight summarizes the arguments:

Efficiency-minded libertarians like the idea of streamlining the bureaucracy of the welfare state. Silicon Valley techies hope a guaranteed income would cushion the blow as automation replaces human jobs. Those with a more utopian bent, such as the organizers of the Swiss referendum, want to open up more options, to let people create art and free the world of what Straub calls “bullshit jobs.”

Critics of the idea say it’s too expensive, would encourage people to stop working and possibly tank a country’s economy. It’s thought to be a political non-starter, too, especially in countries less wealthy and with less generous welfare states than Switzerland. And because basic income proposes a radical reform to the existing welfare system — one that many progressives, at least in the United States, have been defending tooth and nail over the last 30 years — it makes anti-poverty advocates nervous.

Check out Fivethirtyeight's in-depth analysis here, complete with charts showing where the U.S. ranks in social assistance programs as compared to OECD countries (the results are surprising), and illustrating the "cliffs" in guaranteed income from social programs in the U.S.

Income inequality is so extreme, states rely on a handful of wealthy taxpayers

The New York Times, in an article titled, "One Top Taxpayer Moved, and New Jersey Shuddered," explains:

Our top-heavy economy has come to this: One man can move out of New Jersey and put the entire state budget at risk. Other states are facing similar situations as a greater share of income — and tax revenue — becomes concentrated in the hands of a few.

Read more here.

Bloomberg BNA: FCC to Vote on TCPA Exemption for Federal Debt Collection Robocalls

The vote was supposedly to take place on May 4--two days ago--but I can't find a record of it on the FCC web site.  (HT: Norm Silber).

Dee Pridgen's Review of Chris Hoofnagle's Federal Trade Commission: Privacy Law and Policy

Chris Jay Hoofnagle, FEDERAL TRADE COMMISSION:  PRIVACY LAW AND POLICY (2016)

Reviewed by Dee Pridgen

Chris Hoofnagle has put together an impressive, authoritative and useful treatise on the law of consumer privacy in the U.S. and the role of the Federal Trade Commission.  This book is an excellent read for all those interested in consumer privacy, and should prove to be a valuable resource for years to come.

Part I is a detailed description of the history, structure, political context and legal authority of the FTC, vis a vis its consumer protection mission.  This part could be a worthwhile stand-alone reference work in itself, since the FTC has not been studied this closely by other scholars in recent years.  Hoofnagle exhibits a deep understanding of the FTC’s “unfair and deceptive trade practices” mandate, and how it has come to be used in the protection of consumer privacy.  Hoofnagle concludes, correctly, that the FTC is “the country’s top privacy cop,” a role that started to emerge in the 1990’s, but is based on its experience in consumer protection since the mid-1930’s.  As Hoofnagle notes, the FTC doesn’t often get the recognition it should, especially since the creation of the Consumer Financial Protection Bureau (CFPB) in 2010 threatened to overshadow the FTC. 

Part II traces the history of FTC privacy actions from the mid-1990’s to the present.  Hoofnagle notes that due to the quirks of the FTC’s legal authority to issue regulations, the FTC has taken mostly a case by case approach.  Indeed, a “common law” of consumer privacy has emerged from the collection of FTC consent orders, especially in the area of data security.  The industry basically looks to the specifications in these consent orders as a code of “best practices” they would be wise to adopt to escape FTC scrutiny.  As to consumer online privacy, the FTC promotes industry self-regulation, and has supported “notice and choice” disclosures, which Hoofnagle recognizes as somewhat weak and ineffective, as shown by behavioral economics.  The book also features accurate summaries and insightful critiques of specific privacy-related federal statutes, including COPPA (Children’s Online Privacy Protection Act), FCRA (Fair Credit Reporting Act), CANSPAM, Telemarketing Sales Act and FDCPA (Fair Debt Collection Practices Act).  Hoofnagle also compares the European privacy laws to those of the U.S., finding the European law to be much more pro-consumer and reflecting a different mindset than prevails here.

In Part III, Hoofnagle concludes with the “need to defend the FTC.”  He notes that more private information is now being tracked and used by advertisers and platform companies alike than ever before and that the current regulatory regime for privacy in the U.S. is inadequate.  The FTC is the most experienced consumer protection agency, and consumer privacy issues can resurrect old consumer problems in new ways.  Hoofnagle gives the example of Facebook acting as “an information age bait and switch,” by attracting customers based on good privacy policies and then changing those policies later in ways that undermine privacy.  He argues persuasively that the FTC needs to be strengthened, not weakened, and that it should continue to cooperate with other agencies such as the CFPB, fighting on the same side in the same battle for consumer privacy.  

CFPB Arbitration Rule SBREFA Report

Another important regulatory document related to the CFPB's proposed rule is the Final Report of the Small Business Review Panel on the CFPB’s Potential Rulemaking on Pre-Dispute Arbitration Agreements. In creating the CFPB, Congress subjected its regulations to the requirements of SBREFA, the Small Business Regulatory Enforcement Fairness Act, a piece of legislation originally enacted in 1996 to apply to EPA and OSHA rulemakings. Thus, before proposing its rule, the CFPB was required to convene a panel of representatives of small business entities, which expressed a variety of concerns about the proposed rule that are reflected in this report.

CFPB press release on its arbitration rule

Here.

Paul Bland's HuffPo Arbitration Column: The CFPB Just Took a Huge Bite Out of Predatory Lending

Here.

CFPB issues proposed rule on forced arbitration clauses that ban class actions

The CFPB has just released its much-awaited proposed rule on forced arbitration clauses -- arguably the single biggest step the Bureau can take to level the playing field for American consumers. 

If adopted after notice-and-comment, the CFPB's new rule would prohibit forced arbitration clauses that prevent consumers from banding together to hold companies accountable in court, effectively nullifying the impact of the Supreme Court's AT&T Mobility v. Concepcion decision in the market for consumer financial services. The proposed rule would also require companies with arbitration clauses to send the CFPB the claims, awards, and other information filed in arbitration cases, to allow the Bureau to monitor what until now has largely been a secret system of corporate tribunals. 

You can read the Bureau's entire 376-page proposal here. It contains an extensive history of class actions and arbitration, a summary of the Bureau's study on arbitration clauses, and a sustained defense of the policy merits of the Bureau's proposal. 

The proposal will be announced by Rich Cordray at a field hearing in Albuquerque, New Mexico on Thursday morning. I will be speaking as a consumer representative, along with Christine Hines of the National Association for Consumer Advocates and Paul Bland of Public Justice. The industry will be represented by Travis Norton of the U.S Chamber, Alan Kaplinksy, and a lawyer for credit unions.

Early coverage can be found in The Hill, the New York Times, and the L.A. Times. The U.S. Chamber came out swinging even before the proposal was released, decrying the "CFPB's class-action rule" as a "rich deal for trial lawyers" and a "raw deal for consumers." 

Along similar lines, a shadowy outfit calling itself "Protect America's Consumers" has just released a very nasty TV ad attacking the CFPB, suggesting (without a shred of evidence) that Rich Cordray's personal motive in supporting the rule is to gin up trial lawyer donations for a future gubernatorial run in Ohio. If previous campaigns by this group are any guide, the ad will likely receive signifiant airtime--possibly during the presidential debates.

The Chamber's congressional allies are likewise attempting to tie the Bureau to trial-lawyer groups. In a recent letter, Congressman Sean Duffy of the House Financial Services Committee informed the CFPB about an investigation into the rule. He asked asked for communications between bureau officials and consumer advocacy and trial-lawyer groups including the American Association for Justice, National Consumer Law Center, National Association of Consumer Advocates, Alliance for Justice, and Public Justice. 

More on the Argument that the CFPB's Single Director Structure is Unconstitutional

Last week I posted something about the latest attack on the CFPB's constitutionality because of its single-director structure and sought comment.  Americans for Financial Reform Policy Counsel Brian Simmonds Marshall addressed the issue on the ACS Blog in an informative post titled An Easy Case: Why a Federal Appeals Court Should Reject a Constitutional Challenge to the CFPB. An excerpt from the end of the post:

A decision striking down the CFPB’s structure would not only break new constitutional ground, it would have wide-reaching practical consequences as well. Such a holding would mean that the structures of at least three other agencies are also unconstitutional because they are headed by a single official removable only for cause * * * *

Unfortunately, PHH could hardly be more fortunate in the panel drawn to decide this issue. All three judges were appointed by Republican presidents. One judge on the panel has suggested in a prior case that he believes the Constitution would be best interpreted to require that all agency heads be removable by the president without cause and that the Supreme Court was mistaken when it decided otherwise 80 years ago. But even if the three-judge panel rules that the CFPB’s structure is unconstitutional, it will hardly have the last word: The CFPB can seek further review by the full D.C. Circuit and the Supreme Court.

FTC files complaint alleging companies deceived consumers with fake newspaper subscription notices

The Federal Trade Commission has charged the operators of dozens of companies with deceiving consumers by using fake newspaper subscription notices.

According to the FTC’s complaint, through a complicated web of companies, the defendants send consumers “Notice of Renewal/New Order” mailers for subscriptions to newspapers such as The New York Times, The Wall Street Journal, The Seattle Times and The Denver Post, and for magazines. The notices claim that consumers’ subscriptions will automatically renew if they pay, and that the price – “one of the lowest available rates” – is authorized by the publisher.

In fact, the FTC alleges the defendants do not have publishers’ authorization and charge up to 40 percent more than the newspapers typically charge. Only in fine print on the back of the fake notices do the defendants state that they “do not necessarily have a direct relationship with the publishers or publications” – and that disclosure refers only to magazine subscriptions, according to the complaint.

The FTC seeks to stop the operation and obtain money for return to consumers.

The full press release is here.