Consumer Law & Policy Blog

To Users of Our Casebook Who Assign the CAN-SPAM Materials: Facebook Case Reversed in Part

by Jeff Sovern

The Ninth Circuit reversed the portion of the Facebook, Inc. v. Power Ventures, Inc., case at page 510 of our consumer law casebook, dealing with the CAN-SPAM Act, on the issue of whether the spam was materially misleading.  Other portions of the decision, not reprinted in the casebook, were affirmed in part.   The decision is reported at 828 F.3d 1068. (HT: James P. Nehf)

CFPB dings D.C. Circuit's decision in PHH Corporation v. CFPB

In a case in federal district court in North Dakota, the Consumer Financial Protection Bureau has filed this brief about the D.C. Circuit's decision in PHH Corporation v. CFPB and said this:

In considering a separation-of-powers challenge to the Bureau’s structure, the PHH panel announced a new constitutional rule that agencies must be structured as multimember commissions if their heads are removable only “for cause” rather than at the will of the president. This principle has no basis in the text of the Constitution or in Supreme Court case law. Instead, the panel based its decision on (a) the lack of sufficient historical precedent for the Bureau’s structure, and (b) a policy judgment that multimember commissions are superior to single agency heads. The panel did not—and could not—conclude that the Bureau’s structure either aggrandizes the legislative branch or diminishes the president’s ability to direct the operations of the executive branch, beyond what the Supreme Court approved in Humphrey’s Executor v. United States, 295 U.S. 602 (1935) (approving “for cause” removal protections for FTC heads). Slip op. at 55–59. The panel decision was wrongly decided and is not likely to withstand further review. (emphasis added)

For more on the PHH decision, go here, here, here, and here.

Concerning upcoming changes to the prepaid card market

As we noted in a previous post, the Consumer Financial Protection Bureau recently announced new rules, effective October 1, 2017, governing the prepaid debit card industry.

As the Washington Post explains, "It’s a big change more than two years in the making that’s expected to bring some basic account protections to its customers, who are often financially disadvantaged." The Post offers an explanation of some things you should know about the cards and the rules, here.

WaPo's Michelle Singletary: Stop the insanity over the consumer protection board

Here. Excerpt:

Throughout history, Congress has had to step in to make corporations do the right thing. That’s why we have rules about working conditions. That’s why we have a minimum wage.

And that’s why the CFPB was established to help with gaps in consumer protection. It was time to do something different. It was time to set up an agency with as little political influence as possible that would work solely on behalf of consumers.

But still some legislators, with big business buzzing in their ears, want to roll back to a time of “let the buyer beware.” I guess the housing crisis is ancient history to them.

* * *

* * * Critics of the CFPB, many of whom have a biased agenda to back the financial industry, don’t want a consumer watchdog holding these corporations accountable. We would be foolish to allow them to succeed at that mission.

 

 

Which Consumer Law Tweeters Do You Follow?

by Jeff Sovern

I find Twitter a useful source of information on a wide variety of topics. I'm curious to know whom people follow in the area of consumer law.  Sources I find helpful (in no particular order): David Dayen, Mathew Bruckner, Financial Services (Dems on the House Financial Services Committee), Consumer Reports, Ted Frank, David Lazarus, Financial Services (GOP on House Financial Services Committee), Deepak Gupta, Chris Hoofnagle, Fred O. Williams, Paul Bland, Center for Justice & Democracy, Center for Responsible Lending, Alliance for Justice, Americans for Financial Reform, Christine Hines, Public Justice, Truth in Advertising, Dalie Jimenez, Kathleen Engel, Rob Blackwell, Evan Weinberger, IAPP Daily Dashboard.  But I am always on the lookout for more.  Please post additional recommendations in the comments.

Commentary on D.C. Circuit's CFPB Decision

I've written a short opinion piece for The Hill called "The D.C. Circuit demotes Richard Cordray." It's available here.

SEO Firm Devises New Way to Impose Nondisparagement Clause on Dissatisfied Customers

by Paul Alan Levy

Over the past decade, I have had occasion in several separate cases to help consumers in opposing creative ways in which dentists (Stacy Makhnevich, Mitul Patel, Gordon Austin, and others) have tried to insulate themselves from criticism by their customers. So it's about time I had a chance to help a dentist stand up for his own free speech rights.

A Houston dentist named Thomas Inman hired an Austin-based SEO outfit called “Local Search for Dentists,” whose promotional materials suggest that its customers gain roughly sixty new customer calls per months.  Inman authorized the firm to bill his credit card roughly $500 per month.  But when that credit card expired and he was asked for a new card number, he reviewed the results from his expenditure and concluded that he was not deriving the expected benefits.  

That is when his troubles began. The contract that he had signed at the outset had a clause requiring sixty-days notice to cancel the month-to-month SEO arrangement, and requiring further that the written notice be given “on official Local Search for Dentists documentation.”  But the cancellation form faxed to Inman contained several provisions to which Inman objected, including most notably a long paragraph in which the parties would agree to “keep the contents of this document confidential” and further that the parties would “not disparage each other, cause the disparagement of each other, or allow the continued publication of prior disparaging statements.”  Inman declined to sign this form, but rather canceled his SEO arrangement by a letter indicating that he was unwilling to sign away his right to criticize the SEO firm.  The firm’s CEO, Graig Presti, sent a series of emails directed to ”Carter” asserting that Inman was “refusing . . . to cancel properly,” directing “Carter” to “get the paperwork going today,” and concluding “It will be a slam dunk from a legal stand point.”  A few days later, Inman received a letter from an Austin lawyer named Carter Thompson charging Inman with having “refused to fill out the cancellation form” and warning, “If you refused to fill out the cancellation form, you have not cancelled the contract.”  Therefore, Thompson said, his client would be suing for breach of contract for the unpaid monthly sums.

FTC obtains court orders barring skincare marketers from deceptive marketing practices

The Federal Trade Commission announced today that it obtained court orders permanently barring a group of California-based marketers from the deceptive marketing and billing tactics allegedly used to promote their skincare products.

Twenty-nine defendants who sold Auravie, Dellure, LéOR Skincare, and Miracle Face Kit branded skincare products have agreed to court orders with the FTC or had default orders entered against them.

The agency’s complaint charged a group of individuals and companies with selling their skincare products through false advertisements for “risk-free trials.” The FTC alleged violations of the FTC Act, the Restore Online Shoppers’ Confidence Act, and the Electronic Funds Transfer Act.

According to the FTC, the defendants convinced consumers to provide their credit card information, purportedly to pay nominal shipping fees. However, the defendants allegedly used consumers’ credit card information to impose unauthorized recurring monthly charges of up to $97.88 per month for unordered products.

The FTC's press release is here.

FTC charges tech support companies with using deceptive pop-up ads to scare consumers into purchasing unneeded services

The Federal Trade Commission announced that is charged the operators of a multi-national tech support company with using deceptive pop-up internet ads to scare thousands of consumers into paying hundreds of dollars each for unnecessary technical support services. It obtained a court order temporarily stopping the defendants’ practices and freezing their assets. The defendants commonly operated under the name Global Access Technical Support.

The FTC’s complaint alleges that the defendants used affiliate marketers to place internet pop-up ads designed to deceive consumers into thinking the ads originated from legitimate technology companies like Apple or Microsoft to warn the consumer that their computer was infected with viruses or malware. The ads often included loud alarms or recorded messages warning of the apparent dire threat to consumers’ computers and “hijacked” consumers’ browsers, leaving consumers unable to navigate around the ads or close them. The ads prompted consumers to contact a toll-free number.

According to the complaint, once consumers called the toll-free number, they were connected to a call center in India and pitched by telemarketers who claimed to be affiliated with or certified by a major technology company. Consumers were told that in order to diagnose the problem, they must provide the telemarketer remote access to their computer. The telemarketers then showed consumers otherwise innocuous screens and directories on their computers, deceiving them into believing they were evidence of problems that require technical support services to repair.

The complaint alleges that the telemarketers pressured consumers to spend anywhere from $200 to $400 for repair services that were at best useless and in some cases could harm consumers’ computers.

The full FTC press release is here.

Study shows coupons lead to big profits for drugmakers

NPR's Marketplace reported this morning:

In the last few years, there's been such a spike in drug coupons, pharmaceutical companies have barely been able to print them fast enough.

Coupons help patients shoulder the cost of expensive prescriptions, but a new paper out in the New England Journal of Medicine finds certain coupons are also a windfall for drug companies. Harvard Business School economist Leemore Dafny, Northwestern’s Chris Ody and UCLA’s Matt Schmitt found when manufacturers issued coupons right before a generic competitor entered the market, branded drug sales soared by 60 percent.

The full NPR story is here.