Consumer Law & Policy Blog

Department of Education issues new rules to help students seek relief from loans where school engaged in fraud

The Department of Education today issued new rules to help students get their federal loans erased in cases involving fraud and misconduct by their schools. The rules were prompted in part the closing of Corinthian Colleges amid allegations of fraud.

As the New York Times explains, the new rules will clarify that students are eligible to have loans erased if their college misrepresents the quality of its programs or the success of students; if the college breaks a "contractual promise" with its students; and if a state or federal court rules that the loan should be forgiven.

The new rules also ban schools receiving federal funding from requiring students to agree to predispute arbitration clauses or to bar students from bringing their claims through class actions.

Public Citizen, and in particular my colleague Julie Murray, submitted a citizen petition to the Department earlier this year asking it to condition school participation in the federal student loan program on a school's commitment not to require students to sign predispute arbitration agreements, and Public Citizen's/Julie's comments on the subsequent proposed rule are reflected in the strong final rule issues today. Julie is quoted discussing the new rule in this Market Watch article, which also provides some details and context.

The final regulations are here.

Check out this investigative report on FDA's adverse-event reporting system for medical devices

The Minneapolis Star Tribune has published this investigative report on the FDA's adverse-event reporting system for medical devices. The Star Tribune used the Freedom of Information Act to get information from the FDA about patient injuries associated with medical devices. By law, this information should have been public in the first place.

The report is quite in-depth and well worth a read. Here are some excerpts:

Makers of medical devices, from heart valves to drug pumps, are required to tell the U.S. Food and Drug Administration whenever they learn that a product may have injured someone. Those reports are usually available to patients and their doctors. But a Star Tribune analysis of recently obtained data shows that the FDA has accepted late reports that cover hundreds of thousands of incidents, sometimes years after the fact, and has created a program that lets device makers keep the details out of view. * * * The FDA gets so many reports beyond the usual 30-day deadline that it has created a “retrospective summary reporting program” for them. No written description of the program is available on the FDA’s website, no law explicitly authorizes it and there is virtually no public paper trail of its existence. * * * Critics see two problems. First, the secret summaries leave doctors, patients and researchers without a complete record of adverse events, unless they go through a Freedom of Information process that can take more than a year. * * * Second, giving companies the ability to privately summarize large numbers of events, well after the legal deadline, could give them a way to hide safety issues.

 

Shopping and (the lack of) privacy

Read Kaveh Waddell's article entitled Incessant Consumer Surveillance Is Leaking Into Physical Stores. Here's an excerpt:

You just wanted to shop for a birthday gift in peace—instead, you got ads that follow you around the internet, and coupons in your email that remember exactly which products you clicked on. So you shut down your computer, stick your hands into your pockets, and walk to the store. Here, among the throngs of shoppers, you may feel more anonymous than you do behind a screen unburdened by cookies and tracking pixels, and you can browse in peace.

Except not really. If you brought your smartphone, its GPS probably tattled on you before you even walked through the doors. Take your phone out and it might start picking up inaudible sounds broadcast throughout the store to pinpoint your location and send you targeted ads. Surveillance cameras hidden in light fixtures track your movement through the aisles, and could even be using facial-recognition software to understand your preferences and habits and attach them to your personal profile.

CFPB issues monthly report on consumner complaints

The Consumer Financial Protection Bureau has released its monthly complaint snapshot, this one highlighting consumer complaints about prepaid products. The report shows that consumers continue to experience issues trying to manage their accounts and access funds. The report also highlights trends seen in complaints coming from North Carolina.

Regarding prepaid cards, common complaints included unauthorized transactions, difficulty registering and using cards, and delays and difficulties getting the company to help resolve problems. The CFPB received the most complaints about the prepaid cards of American Express, PayPal Holdings, Inc., and NetSpend Corporation.

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

Odinet & White Paper on the CFPB's Proposed Debt Collection Rules

Christopher K. Odinet and Roederick C. White Sr., both of the Southern University Law Center, have written Regulating Debt Collection, Review of Banking and Financial Law, 2017 (Forthcoming).  Here is the abstract:

Debt collection. It often starts as a late night call carrying threats of being thrown in prison, ruin at the workplace, and trouble for the family unless you pay up. While the law actually prohibits some of these tactics, most consumers do not know their legal rights, which leave much to be desired, or fail to exercise them when faced with the harassing practices of some debt collectors. Moreover, the debt collection industry as a whole — both massive and sophisticated — lacks the incentives to self-police or internally punish bad actors. In July 2016 the Consumer Financial Protection Bureau released a proposal aimed at overhauling the entire debt collection industry — both as to how collectors interact with consumers and how debts are bought and sold. Consumer protection groups have lauded the new rules as a win for average Americans, while consumer credit firms caution that some of the provisions go too far and risk crippling the collection industry, which would have an adverse effect on the ability of people to obtain the type of everyday credit that makes the wheels of the economy turn. This Article explores the proposed rules and critiques the places where they fall short or go too far, as well as considers future developments and issues that will arise from their enactment. 

Self-driving delivery trucks. Really.

This article by Laura Northrup is about self-driving delivery trucks. Yes, apparently, at least one of them has hit the rough and rowdy road. Here's an excerpt that may pique your interest:

AB InBev and Uber teamed up last week for a ceremonial delivery: the first recorded commercial shipment delivered by self-driving truck. It was a load of Budweiser, and the truck made its 120-mile trip down a highway with no driver in the seat. There was a driver on board, of course, ready to take the controls if needed. Self-driving trucks are a long way from widespread deployment in the real world: the trip from Fort Collins to Denver required careful mapping of the route, good weather, and an early-morning trip with light traffic.

 

 

"Despite warnings, extremely dangerous air bags not repaired"

The Washington Post reports today:

Owners of more than 300,000 Hondas have yet to get their air bags repaired, despite warnings from the automaker and regulators that the inflators have an extremely high chance of rupturing and causing injury or even death.

Last week authorities said one of those air bags, equipped with an inflator made by Takata Corp., ruptured and killed a California woman, adding urgency to the search for the noncompliant vehicles.

About 69 million Takata inflators have been recalled due to possible rupture. In June, government regulators said testing showed that inflators in 313,000 older Hondas and Acuras had as high as a 50 percent chance of rupturing in a crash. The regulators told owners of the cars to stop driving them and get them repaired. But four months later, only 13,000 of the cars have been repaired.

The full article is here.

CFPB report on market developments with potential for consumer-friendly innovation

The Consumer Financial Protection Bureau yesterday released a report highlighting various market developments that have the potential to produce benefits for consumers. These developments are emerging from FinTech startups and traditional financial institutions, and include new products, services, and trends. The report also provides an overview of Project Catalyst’s work to promote consumer-friendly innovation and outlines the importance of ensuring consumer protections are built into emerging products and services from the outset.

The CFPB report is here.

Cybersecurity and the October 21 denial-of-service attack on the Internet

If you want information on the difficult cyber security problems raised by the massive October 21 cyber attack, you may want to read this interview with cyber security expert Herb Lin. Note the particular security problems posed by the Internet of Things. 

Joanne Doroshow's HuffPo Op-ed: FTC May Make it Easier for Used Car Dealers to Sell Recalled Cars

Here.  Doroshow is at New York Law School's Center for Justice and Democracy. Excerpt:

The FTC, whose tag line is “Protecting America’s Consumers,” has decided to side with the corporate lawyers and executives at General Motors and two used car chains, agreeing to a legal settlement regarding the sale of cars under safety recall. Specifically, the proposed settlement would not only allow them to sell used cars under safety recall, but also allow them to say these cars are “safe” and “repaired for safety” and passed a “rigorous inspection.” (Sort of like permitting skydiving companies to assure customers that the parachute rig is safe even though there’s no parachute.) Perhaps the FTC needs a new tag line.

All the car dealer has to do is “disclose” that the car has been recalled somewhere near language stating the cars are “certified” and “repaired” and “safe.” But obviously, the whole idea is to allow used car dealers to confuse customers into thinking they are buying a safe car when in fact the car is completely unsafe and could kill them. What’s more, this would be binding for the next 20 years, setting the de facto standard for the industry.