Consumer Law & Policy Blog

American Banker: Putting Agencies on Budget Could Lead to 'Whipsaw' Regulation

Here (behind paywall).  The CFPB is one of the agencies that House Financial Services Chair Jeb Hensarling's bill would ubject to the appropriation process.  Excerpt from the article:

"There are many things to like about Chairman Hensarling's bill, particularly its tough capital requirements," [former FDCIC head Sheila] Bair said. "However, subjecting the banking agencies to congressional appropriations is not a good idea. Past history has shown that appropriations bills present ripe opportunities for industry lobbyists to wreak havoc with the funding resources of their overseers."

The drive to subject the agencies to appropriations is relatively recent. A decade ago, Republicans led the charge to push the Office of Federal Housing Enterprise Oversight - then the regulator of Fannie Mae and Freddie Mac - to be independently funded.

At the time, Fannie and Freddie were able to call on allies in Congress to wreak havoc with OFHEO's funding, hampering its ability to oversee the government-sponsored enterprises. * * *

* * * Many point to the Securities and Exchange Commission and the Commodity Futures Trading Commission, both of which have been limited by congressional battles over their budgets. * * *

During testimony Tuesday before the Senate Banking Committee, SEC Chair Mary Jo White said the lack of funding has slowed rulemaking and that the agency is being outspent on the IT side by the firms it regulates.

Jason Cross, Complaining About Right of Publicity Violations, Wants His Fans to See the Pages Over Which He Has Sued

I blogged a couple of weeks ago about a "country hip-hop" musician who had part of his lawsuit against Facebook, for hosting pages that denigrate him, dismissed under California's anti-SLAPP law but managed to hang onto his claims that Facebook had violated his right of publicity by hosting such pages while serving ads on them.    My post pointed out the dangers in this ruling; I have heard from a number of others who plan to file amicus briefs in support of Facebook on appeal.

But for someone who is unhappy about the existence of such pages, Cross seems anxious to have his followers see them.  In his first Facebook posting mentioning the case that I have heard about, Cross said "Anyone want to read up on my lawsuit that has already changed California Law as of  3 weeks ago... the decision passed down by the courts has FB trying to settle me out.  Everyone google Jason Cross aka Mikel Knight Vs Facebook."  This is what that running that search string on Google produces today:

On yesterday's net neutrality decision

The New York Times applauds the decision and explains why it benefits consumers, here.

Politico adds some political perspective, here.

The Washington Post explains the net neutrality rule and why it matters, here.

Wired reports that AT&T plans to seek Supreme Court review and that congressional Republicans want to block the rule, here.

FDA warns Whole Foods of "serious violations" of food safety regulations

CNBC reports:

Whole Foods was slapped with a warning letter from the Food and Drug Administration earlier this month after the FDA found "serious violations" of federal regulations during an inspection of the company's food preparation facility in Massachusetts.

FDA inspectors reportedly found various food products, including mushroom quesadillas, chives, beets and couscous that were exposed in areas where condensate was leaking from ceiling joints, doorways, pipes and fans.

In addition, the FDA cited that Whole Foods employees failed to sanitize food prep stations, did not change gloves or wash hands between tasks and did not take caution to prevent cleaning supply fluid from touching ready-to-eat products.

The full story is here.

Ripoff Report Will Drop Contract Term That Public Citizen and EFF Criticized for Hurting Consumers

by Paul Alan Levy

In a comment posted yesterday to my blog post last week about an amicus brief that Public Citizen and EFF filed in the First Circuit, Ripoff Report founder Ed Magedson announced that his company is going to modify the browsewrap agreement that it has been imposing on users, whereby the company purported to obtain an exclusive license to carry reviewers’ critical content.  This is progress for which that company deserves praise.

As I explained in last week’s post, our amicus brief agreed with Ripoff Report’s argument that plaintiff Small Justice had abused copyright law by trying to invoke it to enjoin continued posting of allegedly defamatory content.  However, we also argued that a term in the Ripoff Report browsewrap contract that took an exclusive license in reviews was an unenforceable contract of adhesion.  Our principal concern was that such a contract could be used to prevent users from posting the same criticism, in identical or even similar language, on other review sites.

According to Magedson’s comment, the only reason the current browsewrap agreement takes an exclusive license is to enable Ripoff Report to go after other review-hosting sites for “scraping” its content.  He insists, as his counsel did when I discussed the case with them before filing our amicus brief, that Xcentric Ventures (the owner of Ripoff Report) has never pursued a copyright claim against a user for reposting the identical review elsewhere.  However, to deal with the “academic concern” that I expressed in my blog post, Xcentric has now decided to revise the browsewrap agreement so that although reviewers will give the full copyright interest in their content to Xcentric, Xcentric will, in turn, give the reviewers licenses to re-post  their own content. 

I confess I not at all persuaded that Xcentric has any legitimate need to grab users’ copyright to attack “scraping.”  Other review-hosting sites such as Yelp feel quite capable of addressing scraoing without having such an abusive contract claim.  Moreover, although I can understand why Xcentric might see scraping as being contrary to its interests, it would be my guess that most consumers who have taken the trouble to compose critical reviews about businesses would be pleased to learn that their criticisms have been disseminated even further by other review sites, legitimate or otherwise.  And if that is so, I am not inclined to believe that is worth any risk to consumers to justify the new browsewrap contract that Xcentric is developing.  (And I express no view whether the new language would meet the legal concerns under Arizona law that our amicus brief presents).

Indeed, when I pressed Magedson in a conversation after he made his comment, it seemed to me that the justification for taking copyright was two-fold – that scrapers take traffic from his web site, and that scrapers make it less valuable for companies to buy into the “Corporate Advocacy Program.”  Neither of those arguments suggests that there is any reason why the interests of consumers who write reviews on Ripoff Report are advanced by the taking copyright ownership away from them.

Moreover, I am less than impressed by the need to make the Corporate Advocacy Program more valuable, but discussing that here would detract from my main point, which is to express appreciation for Xcentric having responded to our amicus brief by dropping the browsewrap provision that we criticized.

LATimes's David Lazarus: Republicans cook up plan to cripple consumer agency

Here. Excerpt:

 

“[House Financial Services Committee Jeb Hensarling would] gut Dodd-Frank and gut the Consumer Financial Protection Bureau,” said Deepak Gupta, a Washington lawyer who previously worked as senior counsel for the watchdog agency. “Jeb Hensarling is a wholly owned subsidiary of the financial services industry.”

Too harsh? Not when you consider that, according to the Center for Responsive Politics, Hensarling has received more than $5.5 million from financial firms and industry groups since being elected to the House in 2002. The top two contributors to his political endeavors are JPMorgan Chase ($105,000) and the American Bankers Assn. ($85,000).

DC Circuit upholds FCC's net neutrality rule

The U.S. Court of Appeals for the D.C. Circuit just released an opinion rejecting a challenge to the Federal Communications Commission’s 2015 decision to impose network neutrality rules, which seek to prevent internet service providers from blocking or favoring websites. In short, the background of the case is this:

The Commission ... promulgated the order at issue in this case—the 2015 Open Internet Order—in which it reclassified broadband service as a telecommunications service, subject to common carrier regulation under Title II of the Communications Act. The Commission also exercised its statutory authority to forbear from applying many of Title II’s provisions to broadband service and promulgated five rules to promote internet openness. Three separate groups of petitioners, consisting primarily of broadband providers and their associations, challenge the Order, arguing that the Commission lacks statutory authority to reclassify broadband as a telecommunications service, that even if the Commission has such authority its decision was arbitrary and capricious, that the Commission impermissibly classified mobile broadband as a commercial mobile service, that the Commission impermissibly forbore from certain provisions of Title II, and that some of the rules violate the First
Amendment.

The court upheld the FCC's action in full. The opinion is here.

FTC settles with telemarketer that falsely claimed sales help disabled persons

The Federal Trade Commission has settled with defendants American Handicapped Inc., American Handicapped and Disadvantaged Workers Inc., and their owner charges that the defendants tricked consumers into buying household products on the false pretext that the proceeds would go to help disabled people.

According to the FTC’s complaint, the defendants’ telemarketers cold-called consumers to sell them light bulbs, trash bags, and cleaning products and to seek charitable donations in return for a free gift. The telemarketers claimed that they represented a charitable organization that employed disabled persons or that the callers themselves were disabled.

In addition, the defendants allegedly shipped merchandise without consumers’ consent and then falsely told consumers that they owed money for the unordered merchandise. The defendants charged inflated prices for the merchandise, such as $30 for two light bulbs and $100 for 60 trash bags, according to the complaint. Dasuqi received consumer complaints from the Arizona Better Business Bureau and law enforcers in Iowa, Minnesota and other states but failed to stop the scheme, the FTC alleged.

The FTC's full press release, with a link to the settlement entered as an order by the court, is here.

States consider regulating online commercial lenders

Bloomberg reports:

Online financing platforms aimed at small businesses are drawing new scrutiny from states concerned the largely unregulated industry could cause a new predatory lending crisis.

California is soliciting data from the largest lenders as state officials eye a non-bank lending statute as a possible enforcement and regulatory tool. Illinois is considering legislation that would put most of the small business lending players under the thumb of the state’s Department of Financial and Professional Regulation (DFPR).

State scrutiny of commercial lending platforms aimed at small businesses such as restaurants, auto repair shops and tech start-ups comes as federal regulators have also begun assessing the need for greater regulation of online lenders.

The full story is here.

Accreditor of for-profit colleges allegedly overlooked schools' deception

The Washington Post reports:

Federal education officials are deciding whether to shut down the nation’s biggest accreditor of for-profit colleges over allegations that it overlooked deception by some of its schools.

The Accrediting Council for Independent Colleges and Schools is meant to be a watchdog for hundreds of for-profit schools, wielding the stamp of approval that colleges need to receive federal money. It’s one of many accreditors authorized by the U.S. Education Department to ensure the quality of schools. But the nonprofit is being accused of employing lax standards and failing to stop schools from preying on students.

The full story is here.