Consumer Law & Policy Blog

CFPB issues monthly complaint report

The Consumer Financial Protection Bureau yesterday released a monthly report of consumer complaints received by the agency, highlighting complaints about bank accounts and services. The report shows that consumers continue to experience problems managing their accounts. The report also highlights trends seen in complaints coming from Ohio.

The CFPB's press release is here. The report is here.

Mandatory product labeling (for GMOs and otherwise)

Is it a good idea to label genetically modified foods to indicate that they include ingredients that have been genetically modified? And, more generally, when should the government require precautionary labeling? Those are the topics of On Mandatory Labeling, With Special Reference to Genetically Modified Foods by law prof Cass Sunstein. Here is the abstract:

As a result of movements for labeling food with genetically modified organisms (GMOs) Congress enacted a mandatory labeling requirement in 2016. These movements, and the legislation, raise recurring questions about mandatory product labels: whether there is a market failure, neoclassical or behavioral, that justifies them, and whether the benefits of such labels justify the costs. The first goal of this essay is to identify and to evaluate the four competing approaches that agencies now use to assess the benefits of mandatory labeling in general. The second goal is to apply those approaches to the context of GM food.

Many people favor labeling GM food on the ground that it poses serious risks to human health and the environment, but with certain qualifications, the prevailing scientific judgment is that it does no such thing. In the face of that judgment, some people respond that even in the absence of evidence of harm, people have “a right to know” about the contents of what they are eating. But there is a serious problem with this response: the benefits of such labels would appear to be lower than the costs. Consumers would obtain no health benefits from which labels. To the extent that they would be willing to pay for them, the reason is likely to be erroneous beliefs, which are not a sufficient justification for mandatory labels. Moreover, GMO labels might well lead people to think that the relevant foods are harmful and thus affirmatively mislead them.

Some people think that the key issue involves the need to take precautions in the face of scientific uncertainty: Because there is a non-zero risk that GM food will cause irreversible and catastrophic harm, it is appropriate to be precautionary, through labels or through more severe restrictions. The force of this response depends on the science: If there is a small or uncertain risk of serious harm, precautions may indeed be justified. If the risk is essentially zero, as many scientists have concluded, then precautions are difficult to justify. The discussion, though focused on GM foods, has implications for disclosure policies in general, which often raise difficult questions about hard-to-quantify benefits, the proper use of cost-benefit balancing, and the appropriate role of precautionary thinking.

Texas Court Strikes Down Prestigious Pets’ Nondisparagement Clause Lawsuit

by Paul Alan Levy

A state District Court in Dallas (Judge Jim Jordan of the 160th District) has struck down a lawsuit over a non-disparagement clause in a form consumer agreement, holding that it could not be enforced against a consumer who expressed dissatisfaction about the service provided by a local business.  Although we have won default judgments in Utah against Kleargear and in New York against Accessory Outlet, this case represents the first time a company defended its non-disparagement clause with a brief, and thus the first time we have had a judge’s ruling refusing to enforce such a clause.

Background of the Ruling

The order arose because Michelle Duchouquette, a consumer in Plano, Texas, expressed her dissatisfaction on Yelp about  some of the policies of Prestigious Pets.  While she and her husband were away on vacation, she noticed from security cameras in their home that the bowl containing their pet fish had become cloudy, a sign of overfeeding.  She felt that, had Prestigious Pets provided a way for her to get directly in touch with the assigned pet sitter, such problems might be avoided.  Prestigious Pets then brought suit in a small claims court, seeking a few thousand dollars in damages as well as an injunction.  The company claimed both defamation and breach of the non-disparagement clause which, unbeknownst to Michelle Duchouquette and her husband Robert, had been inserted into the fine print of the pet-sitting contract. The Duchouquettes retained counsel and filed a motion to dismiss under the Texas anti-SLAPP statute. 

More than 40% of class members participate in VW emissions settlement

The Washington Post and AP report:

About 210,000 owners of Volkswagens with 2-liter diesel engines that cheat on emissions tests have registered to settle with the company under the terms of a June court agreement.

The figure was revealed in a federal court motion by class action attorneys seeking final approval of the settlement involving 475,000 owners. It says only 235 have asked to stay out of the settlement and pursue legal action on their own. Another 110 objections to the settlement were filed.

The short article is here.

Court dismisses FTC suit against AT&T over data throttling

The Ninth Circuit yesterday dismissed a lawsuit brought by the Federal Trade Commission against AT&T Mobility, in which the FTC asserted that AT&T illegally slows internet data speed to customers with an unlimited data plan.

Section 5 of the FTC Act contains an exemption for “common carriers subject to the Acts to regulate commerce.” 15 U.S.C. § 45(a)(2). The FTC asserted two counts: First, the FTC alleged that AT&T’s imposition of data speed restrictions on customers with contracts advertised as providing access to unlimited mobile data and without terms “provid[ing] that [AT&T] may modify, diminish, or impair the service of customers who use more than a specified amount of data” is an unfair act or practice. Second, the FTC alleged that AT&T’s failure adequately to disclose that it “imposes significant and material data speed restrictions on unlimited mobile data plan customers who use more than a fixed amount of data in a given billing cycle” is a deceptive act or practice.

The court held that AT&T was excluded from the coverage of section 5 of the FTC Act. Specifically, the court held that, based on the language and structure of the FTC Act, the common carrier exception was a status-based exemption and that AT&T, as a common carrier, was not covered by section 5.

The bottom line: Regardless of whether AT&T engaged in unfair and deceptive acts and practices, it cannot be held accountable under the FTC Act.

The opinion is here.

Dealing with phone scammers

Washington Post Columnist Michelle Singletary recently posted about and answered questions about IRS scams -- like those messages on my home answering machine saying that the IRS is about to initiate a prosecution over fictitious tax debt.

Color of Money Live: How to avoid those IRS scams

    Singletary offers advice and answers questions. (Aug. 25)

In the face of IRS impersonators, vive la resistance!

    "By reporting each attempt, we can hopefully save someone from being swindled." (Aug. 23)

Just hang up on phone scammers

    "Don’t be tempted to lead them on — they might retaliate with a SWAT team." (Aug. 20)

FTC consumer tips for people affected by Louisiana floods

In the wake of the flooding in Louisiana, the Federal Trade Commission has developed a series of blog posts with information for people affected by the floods and people who want to help through charitable donations.

These three FTC posts offer information and tips for dealing with disasters and flood-damaged vehicles being sold, and for charitable giving:

Surviving a flood – Dealing with the aftermath offers advice for dealing with the aftermath of a weather emergency/disaster. Topics include insurance claims, rental housing scams, clean-up and debris removal scams, assistance for homeowners from lenders, and options for paying bills.

Shopping for a car? Be alert for flood damage warns people that flood-damaged cars are often cleaned up and taken out of state for sale – as many as half of all vehicles damaged by flooding eventually return to market.

Helping Victims of the Flooding in Louisiana — Make Sure Your Donations Count advises that, before giving money to help people in disaster-affected areas, people should be sure their donations are going to a reputable organization.

Second Circuit to Amazon.com: You Didn't Require a Click, So Your Arbitration Agreement May Not Stick

I have to admit that there are a lot of things I love about Amazon.com. That it tries to require its customers to arbitrate their claims and waive the right to participate in class actions is not one of them.

In an opinion issued today, the United States Court of Appeals for the Second Circuit held that Amazon.com's arbitration agreement may not be enforceable—at least as to some of its customers—because its order page doesn't require customers to click a button saying they agree to Amazon's terms when they place an order.

Kudzu.com has restored review of Mitul Patel

When I first posted about the bogus court order compelling the removal of Matthew Chan's reviews of Mitul Patel from five web sites, I criticized Kudzu.com for removing the version of the review that was posted there without giving any notice to Chan, and called on that web site to reconsider its decision.  I was informed last night that the company has reconsidered the removal, which it claims was for a terms of service violation which, in retrospect, the company has decided was not committed; hence the company has restored the review, which can now be seen here.

 

FTC settlement bans company from debt collection business

The Federal Trade Commission announced today:

A debt collector and his companies will be banned from the debt collection business under a settlement with the Federal Trade Commission and the Attorney General of the State of New York, which charged them with seeking money from consumers for debts they did not owe. The action was part of Operation Collection Protection, an ongoing federal-state-local crackdown on collectors that use deceptive and abusive collection practices.

The stipulated final order resolves charges brought in 2015 against Kelly S. Brace and four companies he owned. The FTC and New York charged them with collecting on fake payday loans they knew consumers did not really owe, and using deceptive and abusive tactics to get them to pay, including false threats of lawsuits and arrest. At the request of the FTC and New York, the court halted the defendants’ operations and froze their assets.

In addition to banning Brace from debt collection, the final order prohibits him from misrepresenting material facts or making unsubstantiated claims about any good or service, and profiting from consumers’ personal information or failing to dispose of it properly. The order imposes a judgment of more than $18.4 million that will be partially suspended based on inability to pay once the defendants surrender assets worth $151,893. The FTC and New York also agreed to a stipulated order against Brace’s ex-wife, relief defendant Joelle J. Leclaire, who profited from the scheme. The order imposes a $418,000 judgment, partially suspended upon her payment of $44,700. In each case, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The FTC's press release is here.