Consumer Law & Policy Blog

Mobile advertising company settles FTC charges of tracking hundreds of millions of consumers’ locations without permission

Singapore-based mobile advertising company InMobi will pay $950,000 in civil penalties and implement a comprehensive privacy program to settle Federal Trade Commission charges it deceptively tracked the locations of hundreds of millions of consumers – including children – without their knowledge or consent to serve them geo-targeted advertising.

The FTC alleges that InMobi mispresented that its advertising software would only track consumers’ locations when they opted in and in a manner consistent with their device’s privacy settings. According to the complaint, InMobi was actually tracking consumers’ locations whether or not the apps using InMobi’s software asked for consumers’ permission to do so, and even when consumers had denied permission to access their location information.

The FTC alleges that InMobi, whose advertising network has reached more than one billion devices worldwide through thousands of popular apps, offers multiple forms of location-based advertising to its customers, including the ability to serve ads to consumers based on their current locations, locations they visit at certain times, and on their location over time.

The FTC's press release is here.

GAO report on CFPB: "Additional Actions Needed to Support a Fair and Inclusive Workplace"

In light about discrimination and retaliation at the Consumer Financial Protection Bureau and concerns about CFPB’s management practices and culture, the Government Accountability Office was asked to review personnel management and organizational culture issues at the CFPB.

This week, GAO released its report, examining (1) CFPB employees’ views on these issues and (2) CFPB’s efforts to strengthen personnel management and culture, among other objectives."

GAO’s survey found heightened concerns related to fair treatment, trust that employees can raise concerns without fear of reprisal, confidence in complaint processes, and other matters. For survey items on these issues, more than 25 percent of respondents bureau-wide had unfavorable views, and dissatisfaction was above 35 percent in some CFPB offices and demographic groups.

GAO made two recommendations to improve CFPB’s personnel management efforts, including developing a strategy for reporting on progress and creating feedback tools on its grievance processes in coordination with its employee union.

The GAO report is here.

Los Angeles addresses evictions used to make room for Airbnb rentals

Courthouse News has this report:

Citing a growing housing crisis in Los Angeles, the city attorney has begun targeting landlords who illegally convert their rent-controlled apartment buildings to short-term tourist rentals or hotels.

"In a city with a profound shortage of affordable housing, unlawfully converting rental units to operate [as] hotels has got to stop," City Attorney Mike Feuer said Monday.

Feuer said at a news conference that he has sued owners of three apartment buildings, in Hollywood and Venice, who turned their properties into hotels.

He filed criminal charges last week against owners of a rent-controlled building near Hollywood who allegedly kicked out all their tenants to replace them with a parade of high-paying, short-term customers brought in by online rental service Airbnb, all in violation of state and city laws.

The full story is here.

"Co-signing a loan? That puts more than your name on the line."

Washington Post columnist Michelle Singletary has this advice:

Just say “no.”

That’s the simple reply to a request from a relative or friend to co-sign on a loan. It’s one of my absolute money rules. I will not be linked financially to a loan for anyone other than my husband.

Her full column on this topic is here.

Operators of tech support scam settle FTC charges

The defendants behind Vast Tech Support have agreed to settle Federal Trade Commission and State of Florida charges that they scammed thousands of consumers out of millions of dollars by selling them bogus technical support services.

Under the settlement, Vast Tech Support, LLC and OMG Tech Help, LLC and their chief operating officer, Mark Donohue are prohibited from misleading consumers about the nature of the products they sell or market, as well as from deceptive telemarketing. In addition, Vast Tech Support and OMG Tech Help are prohibited from advertising, promoting or selling any tech support products or services.

FTC's full press release is here.

Bar-Gill & Ben-Shahar Paper: Optimal Defaults in Consumer Markets

Oren Bar-Gill of Harvard and Omri Ben-Shahar of Chicago have written Optimal Defaults in Consumer Markets.  Here's the abstract:

The design of default provisions in consumer contracts involves an aspect that does not normally arise in other contexts. Unlike commercial parties, consumers have only limited information about the content of the default rule and how it fits with their preference. Inefficient default rules may not lead to opt outs when they deal with technical aspects consumers rarely experience and over which consumers’ preferences are defined only crudely. This paper develops a model in which consumers are uninformed about their preferences, but can acquire costly information and then choose a contract term that best matches their preferences. The paper explores the optimal design of default rules in such environments, and how it differs from the existing conceptions of efficient default rule design.

Amy Schmitz Article: Remedy Realities in Business-to-Consumer Contracting

Amy Schmitz of Missouri has written Remedy Realities in Business-to-Consumer Contracting, 58 Arizona Law Review 213 (2016). Here is the abstract:

Professor Jean Braucher greatly contributed to the exploration of consumer and contract law by questioning how the law operates in the real world and highlighting the importance of “law in action.” In recognition of that contribution, this Article focuses on law in action with respect to consumers’ quest to obtain remedies regarding their business-to-consumers (“B2C”) contracts. Currently, consumers often have no practical recourse with respect to B2C purchase problems due to the complexity, cost, and inconvenience of the processes for obtaining remedies. Accordingly, stated legal rights become meaningless for individuals living in the real world. This Article, therefore, explores access to consumer remedies and proposes ideas for expanding that access through development of fair and efficient online dispute resolution (“ODR”) processes.

Report finds that payday lenders skirt state laws

The Democratic staff of the House Financial Services Committee issued a report yesterday on compliance with state payday lending laws. Entitled “Skirting the Law: Five Tactics Payday Lenders Use to Evade State Consumer Protection Laws,” the report finds that state-level regulation of the payday lending industry is insufficient and concludes that strong federal consumer protections are needed.

Because of the history of abuse in payday lending, many states have attempted to restrict payday loans to protect consumers. The staff press release explains that the report highlights lending practices in five states:

• In Ohio, which has some of the most stringent small-dollar lending laws in the country, payday companies circumvent regulation by registering as mortgage lenders, which are not subject to the same restrictions.
• In Texas, payday lenders pose as separate but affiliated entities that charge additional fees and interest for referring customers to the lender, allowing them to exceed the state’s 10 percent cap on personal loans.
• In Florida, the state’s 24-hour cooling off period serves to trap consumers in a cycle of debt as payday lenders push borrowers to take out multiple payday loans during the same pay period.
• In California, lenders use online lending to broker payday loans to consumer without first obtaining a state business license or complying with state regulations on loan terms.
• In Colorado, payday companies claim tribal ownership to avoid compliance with state law.

The press release, with links to the full report and to the executive summary, is here.

Soda tax in Philadelphia passes final legislative hurdle

Philadelphia becomes the first major city to pass a tax on sugary drinks.

Center for Progressive Reform: Regulating Forced Arbitration in Consumer Financial Services: Re-Opening the Courthouse Doors to Victimized Consumers

Martha T. McCluskey of SUNY Buffalo, Thomas Owen McGarity of Texas, Sidney A. Shapiro of Wake Forest, and James Goodwin and Mollie Rosenzweig, both of the Center for Progressive Reform, have written Regulating Forced Arbitration in Consumer Financial Services: Re-Opening the Courthouse Doors to Victimized Consumers.  Here's the abstract:

Forced arbitration clauses have become almost unavoidable in contracts for financial services and products ranging form credit cards to private student loans. This report examines how the financial services industry uses these clauses to defeat consumers' rights and evade accountability for their wrongdoing.

As the report explains, the forced arbitration process harms consumers by relegating them from the civil justice system to an inferior forum for vindicating their rights. In contrast to the courts, forced arbitration tends to be secretive, less independent of industry, more prone to erroneous and arbitrary rulings, more likely to discourage the pursuit of claims with procedural barriers, and more likely to provide inadequate relief for compensating victims of corporate wrongdoing.

The report examines the 2016 proposal by the Consumer Financial Protection Bureau (CFPB) to limit the use of forced arbitration clauses in contracts for financial services and products, and finds that the proposal is consistent with the agency's statutory obligation to protect consumers. The report goes on to explain that the CFPB would better fulfill its statutory mandate by revising its proposal to include stronger protections for consumers.