Consumer Law & Policy Blog

CFPB issues report on community-based efforts to combat financial exploitation of the elderly

Yesterday, the Consumer Financial Protection Bureau released a report on coordinated community-based efforts to prevent, detect, and respond to elder financial exploitation. According to the CFPB's press release, the "report also found that a strong collaboration among community stakeholders – like financial institutions, adult protective services, and law enforcement – can be very effective in protecting their older residents from financial exploitation."

The press release is here. The report is here.

To help other communities across the country create their own protection partnerships to fight elder financial abuse, the CFPB also released a resource guide and best practices. The resource guide is here.

Adam Levitin Paper: Digital Wallets and Honor All Wallets Rules

Adam J. Levitin of Georgetown has written Pandora's Digital Box: Digital Wallets and the Honor All Wallets Rules.  Here's the abstract:

Digital wallets are poised to transform the world of retailing. These digital wallets, such as ApplePay and Android Pay, are “smart” payment devices that can integrate payments with two-way, real-time communications of any type of data. Integration of payments with real-time communications holds out tremendous promise for retailers: the combination in a single platform of search, advertising, payment, shipping, customer service, and loyalty programs. Such an integrated retail platform offers brick-and-mortar retailers a potentially superior ability to identify, attract, and retain customers, bringing eCommerce-type platforms into the brick-and-mortar environment.

At the same time, however, digital wallets present materially different risks for merchants than traditional plastic card payments precisely because of their “smart” nature. Digital wallets can reallocate flows of consumer data from merchants to financial institutions, depriving merchants of valuable customer information used for anti-fraud, advertising, loyalty, and customer service purposes. Digital wallets can also facilitate poaching of customers by competitors, impair merchants’ customer relationship management, deprive merchants of influence over tender choice and payment routing, increase fraud risk, subject merchants to patent infringement liability, and ultimately increase the costs of accepting payments.

Video on CFPB Debt Collection Rule Proposals

 

Or click here.

Georgia Dentist Mitul Patel Acknowledges That “Consent Order” Was a Fraud, but Claims He is the Real Victim

A few days ago I wrote here about a lawsuit and consent order that were filed in Baltimore, Maryland, determining that a series of criticisms posted against Georgia dentist Mitul Patel by Matthew Chan, one of his patients in Georgia, were false and defamatory, and commanding their removal from the web and from search engine listings.  

Over the weekend I got a call from Patel’s lawyer insisting on a retraction of that blog post; he followed up with a demand letter.   Patel’s counsel, a lawyer whose blog suggests that he specializes in representing dentists, admits that the lawsuit was a fraudulent proceeding, while insisting that it was his client that is the main victim of the fraud, because Patel never authorized the lawsuit, had nothing to do with it, did not even know about the suit until I published my blog article, and yet has had his reputation affected by the fact that Patel’s name is on the complaint as plaintiff.  Patel’s lawyer promises that his client intends to seek damages from the person or company that filed the proceeding, as well as pursuing the possibility that the filing was a crime.

CFPB finds consumers complain of needless hurdles in applying for lower student loan payments

The Consumer Financial Protection Bureau Student Loan Ombudsman released a report last week on consumers complaints of servicing problems that make it difficult to get lower student loan payments tied to their income. Student loan borrowers seeking to take advantage of income-driven repayment plans with their federal student loans complain to the CFPB about prolonged processing delays and wrongful rejections by their student loan servicers. These delays and rejections can result in increased interest charges and lost eligibility for certain federal benefits and protections. In response, the CFPB has published a prototype “Fix It Form” that servicers can use to improve the level of service they provide. 

The CFPB Student Loan Ombudsman's midyear report is here.

CFPB Acts Against Wells Fargo for Illegal Student Loan Servicing Practices

The Consumer Financial Protection Bureau yesterday took action against Wells Fargo Bank for illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers. The CFPB identified breakdowns throughout Wells Fargo’s servicing process including failing to provide important payment information to consumers, charging consumers illegal fees, and failing to update inaccurate credit report information. The CFPB’s order requires Wells Fargo to improve its consumer billing and student loan payment processing practices. The company must also provide $410,000 in relief to borrowers and pay a $3.6 million civil penalty to the CFPB.

The CFPB's order is here.

Noll Article on Regulating Arbitration, including the CFPB's Proposed Regulation

David L. Noll of Rutgers has written Regulating Arbitration,  California Law Review, Forthcoming.  Here's the abstract: 

Arbitration is everywhere, as are calls to regulate its use in consumer and employment contracts. But when should Congress and federal administrative agencies do so? That is, what is the policy rationale for regulating arbitration through federal legislation and agency action? This Article reveals an overlooked set of consequences caused by the growing use of arbitration -- its impact on the implementation of federal statutory policy -- and argues that these effects should be a focus of policymakers' efforts to regulate arbitration through legislation and agency action. In hundreds of statutes, Congress has created financial incentives for private litigants to enforce the law through civil litigation. The enactment of such incentives allows litigants to assert claims that would be too expensive to prosecute under ordinary procedural rules, and, more importantly, allows Congress to calibrate enforcement of federal law. By mandating specific forms of dispute resolution procedure, arbitration can dramatically alter the returns from enforcement of statutes with incentives for private, civil litigation, and, in so doing, subvert or completely undermine congressional efforts to mobilize and calibrate private statutory enforcement. These "enforcement effects" threaten Congress's ability to accomplish substantive regulatory objectives through private, civil litigation but have received little attention. To illustrate how greater attention to them would affect efforts to regulate arbitration, the Article analyzes the Consumer Financial Protection Bureau’s proposed arbitration regulation under section 1028 of the Dodd-Frank Act and explains how it falls short of ensuring that consumer financial protection laws are enforced in the manner contemplated by Congress.

Georgia Dentist Mitul Patel Takes Phony Litigation Scheme to New Extremes Trying to Suppress Criticism

by Paul Alan Levy

At a time when the California Supreme Court is deciding whether to grant discretionary review of the decision of the California Court of Appeal in Hassell v. Bird, which held that Yelp could be required to comply with a default judgment holding that a posted review of a California lawyer was false and defamatory, along comes a situation that crystallizes concerns about judicial willingness to impose such orders on sites that host consumer content.

Matthew Chan, a resident of Columbus, Georgia, posted a series of reviews (for example, on Yelp) complaining that Mitul Patel, a dentist in Suwanee, Georgia, had induced Chan to visit his office by advertising an inexpensive dental cleaning deal.  However, Chan reported that he was confronted with a hard pitch for additional, more expensive services, and Patel allegedly lost interest in providing the cleaning when Chan was not agreeable to buying additional services. I am in no position to say whether Chan’s criticisms of Patel are fair or accurate, but Patel’s sneaky response to the criticism, instead of just suing his detractor in the Georgia courts, tends to suggest that Chan might well have reason to complain.

Can consumer claims that may not be litigated in a class action nonetheless be settled on a class basis without the consumer's affirmative consent (and, if so, when)?

That's pretty much the topic of The Limits of Comprehensive Peace: The Example of the FLSA by Lonnie Hoffman and Christian Ward. Here is the abstract:

Normally, cases can be settled on broad terms that release all related claims. Although there are added protections that must be satisfied when a settlement is proposed in the class action context (which are provided by insisting on judicial approval of the proposed deal), even then the class representatives and defendant can usually agree to compromise the class’s ability to later bring all transactionally-related claims. But how should the law deal with cases that involve multiple claims with different claim-vindication procedures? In this paper we consider the FLSA, which is one of the most important examples of such a law. For decades, courts have consistently held that workers aggrieved by an employer’s [FLSA] statutory violations may not use modern opt-out class action procedures to vindicate their rights. A frequently litigated, but unsettled question is whether a class action brought alleging state law wage and hour claims can be settled on terms that require absent class members to release both state and federal {FLSA] claims, even though the federal claims could not have been asserted through the class suit. We argue that this form of settlement is not permitted by the statutory text and that our construction is consistent with the legislative history.

Uber is about to start using self-driving cars. Really.

Read this article by Russ Mitchell and Tracey Lien. Here's an excerpt:

The robot cars aren’t coming. The robot cars are here. A fleet of Fords and Volvos, capable of driving themselves, is fully equipped and ready to hit the streets of Pittsburgh within weeks. The cars will be deployed by Uber, the ride-hailing company. Experimental robot cars already prowl streets and highways. But in this case, Uber customers will be inside. An Uber employee will be at the wheel in case things go wrong. But, eventually, Uber intends to render human drivers unnecessary. “Uber is accelerating its plan to replace its 1 million human drivers with robots as quickly as possible,” Uber Chief Executive Travis Kalanick said in a blog post Thursday.