Consumer Law & Policy Blog

Amicus Briefs Filed in PHH Case Support CFPB

Ten leading consumer protection organizations have one here, with blog co-coordinator Deepak Gupta as lead counsel, while current and former members of Congress, including Senator Elizabeth Warren and former Congressman Barney Frank, have another one here.

Statute Invalidating Non-Disparagement Clauses in Form Consumer Contracts Nears Enactment

by Paul Alan Levy

Tuesday morning, Judge Jim Jordan of the Texas District Court for the 160th Judicial District heard oral argument on our motion for an award of attorney fees and deterrent sanctions, as provided by the Texas Anti-SLAPP statute, following his decision under that statute to dismiss the lawsuit brought by Prestigious Pets, a local pet-sitting operation, both for defamation and to enforce a non-disparagement clause in its form contract.  But when I got back to my Texas co-counsel's office, I learned that, the night before, the Senate had passed the Consumer Review Fairness Act, a bill that would prohibit non-disparagement clauses in form consumer contracts.  The House adopted the bill earlier this year, and the president is expected to sign the bill, which has faced no public opposition.

This makes it a doubly bad year for Prestigious Pets, whose opposition to the requested fees and sanctions rests heavily on a request for judicial pity based on the claim that the Streisand Effect has destroyed its business and led to severe (indeed nasty) public criticism as consumers reacted adversely to news that this company was suing to enforce a non-disparagement clause.  Prestigious Pets had been saying publicly that it intends to appeal dismissal of its lawsuit; the new law should make such an appeal hopeless.

"US Auto Safety Agency Wants You to Complain More"

The New York Times reports:

The National Highway Traffic Safety Administration is proposing a rule requiring automakers put labels on sun visors of all new vehicles with instructions on how to file safety complaints.

The labels would be glued to passenger visors and tell people that complaints could bring an investigation or a possible recall.

The agency uses consumer complaints to spot safety problems. If NHTSA workers spot a trend in the complaints, the agency investigates and can pressure automakers into doing recalls.

The full article is here.

Trump Transition Picks for FCC Said to be Opposed to Regulation, May Foreshadow Problems for Net Neutrality and TCPA Regulations

by Jeff Sovern

More from The Hill here.  Excerpt:

Trump has tapped tech experts Jeff Eisenach and Mark Jamison, two critics of net neutrality, to head his transition team for the Federal Communications Commission.

So far, Trump's appointments in consumer protection positions seem to oppose consumer protection.

EPA lists first chemicals for review under amended Toxic Substances Control Act

The Toxic Substances Control Act (TSCA) as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, requires EPA to publish by December 19, 2016, a list of chemicals for review. Today, EPA announced the first ten chemicals it will evaluate for potential risks to human health and the environment under TSCA.The ten chemicals were drawn from EPA’s 2014 list of 90 chemicals with potential for high hazard and exposure, as well as other considerations.

Among the chemicals on the list are asbestos, the synthetic industrial chemical dioxane, the solvent methylene chloride, the dry cleaning substance tetrachloroethylene, and the solvent 1-Bromopropane.

When the list is published in the Federal Register it will trigger a statutory deadline to complete risk evaluations for these chemicals within three years.  This evaluation will determine whether the chemicals present an unreasonable risk to humans and the environment. If it is determined that a chemical presents an unreasonable risk, EPA must mitigate that risk within two years.

New CFPB bulletin: Detecting and Preventing Consumer Harm from Production Incentives

In the wake of the Wells Fargo scandal, the Consumer Financial Protection Bureau has issued a bulletin warning banks that creating incentives for employees and service providers to meet sales and other business goals can lead to consumer harm. "Tying bonuses or employment status to unrealistic sales goals or to the terms of transactions may intentionally or unintentionally encourage illegal practices such as unauthorized account openings, unauthorized opt-ins to overdraft services, deceptive sales tactics, and steering consumers into less favorable products," the CFPB wrote. The bulletin outlines various steps that institutions can and should take to detect, prevent, and correct such production incentives so that they do not lead to abuse of consumers.

The CFPB's press statement is here.

The CFPB's bulletin is here.

The future (or not) of the CFPB's arbitration rule

Law prof David Noll has written The CFPB's Arbitration Rule: The Road Ahead. Here is the abstract:

In May 2016, the Consumer Financial Protection Bureau announced that it intended to exercise its authority under the Dodd-Frank Act to bar consumer financial companies from invoking pre-dispute arbitration agreements to block consumer class actions. This comment considers the most serious threats to the Bureau's arbitration rule and concludes that its prospects are bad. Under Trump, banks and credit card companies will continue to avoid class-action litigation by mandating individual arbitration and there is little that supporters of the Bureau's rule can do about it.

A while back, we told you about another article by Noll in which he said that the CFPB's proposed arbitration rule did not go far enough in limiting the enforceability of financial institutions' pre-dispute mandatory arbitration clauses.

Trump Names Point Man on CFPB Who Opposes Regulation, Supports ALEC

by Jeff Sovern

President-Elect Trump has named former SEC Commissioner Paul Atkins his "landing team" member for the CFPB, among other federal agencies.  Atkins has a history of opposing regulation and supporting business.  Politico has a piece about him titled Trump team member slams unions, activists in favor of businesses. Excerpt:

“While Paul is in some ways more of an establishment Republican, I would put him in the free-market category,” said Thaya Brook Knight, an official at the Cato Institute, a libertarian-leaning think tank. * * *

As for whether Atkins would return to government for Trump, Knight said “it is customary” for transition team people to end up in a president’s administration.

Others are not as thrilled at that prospect.

“Tick down the list of issues we care about and you will typically find him on the other side,” said Lisa Gilbert, an official with Public Citizen, a liberal advocacy group.

“We are nervous about what his placement in the transition means,” Gilbert said. * * *

He has spoken in favor of the American Legislative Exchange Council, the controversial, Koch brothers-backed group that has pushed for voter ID laws and “stand your ground” statutes in many states. * * *

“ALEC is a great organization,” Atkins said at the July 3, 2012, Heritage Foundation event, according to an audio recording available online.

For more on ALEC's position on consumer protection laws, go here.  This does not bode well for consumer protection.

Joshua Wright: Federalism and the Rise of State Consumer Protection Laws

Former FTC Commissioner Joshua D. Wright of George Mason has written Federalism and the Rise of State Consumer Protection Law in the United States, in The Law and Economics of Federalism, Jonathan Klick, ed., Edward Elgar Publishing, Forthcoming. Here's the abstract:

Starting in the 1960s, individual states began to adopt and enforce Consumer Protection Acts (“CPAs”), the purpose of which was to supplement the FTC’s consumer protection authority to prohibit “unfair or deceptive acts or practices.” By 1981, each state had its own CPA. The proliferation of state CPAs provides a valuable opportunity to observe competitive federalism in action and to observe the potential effects of concurrent state and federal regulation. The purpose of this paper is to understand the role of state CPAs in the consumer protection landscape with an eye toward drawing lessons concerning whether state CPAs manifest the benefits of competitive federalism, embody a failure of this principle, or neither. After describing the dramatic rise and expansion of state CPAs, this paper focuses upon two empirical studies that cast significant doubt upon the failure of jurisdictional competition to constrain the adoption of state CPA features likely to result in net harm to consumers.

WSJ: Trump Transition Team Considering Killing CFPB

by Jeff Sovern

The Journal's editorial, behind a paywall, is here.  Excerpt:

By all rights the [Consumer Financial Protection] bureau should be killed, and we’re told the Trump transition team is considering this and other options. The political problem is that killing the bureau would probably require 60 Senate votes, and Democrats would be able to portray themselves as defending “consumer protection,” which sounds better than it has turned out. * * *

* * *

Mr. Trump should dismiss Mr. Cordray on his first day as President . . . .

* * *

These abuses can be eliminated with a new director, but Congress should move to restrain the bureau further. One idea would be to put it under the Treasury, like the IRS and Comptroller of the Currency, to make it more accountable to elected officials. It’s also crucial to make the agency subject to annual discretionary appropriations so it must compete with other priorities. * * *

The editorial never mentions that the Bureau has obtained $11.7 billion in relief for more than 27 million consumers, or the CFPB's role in connection with the unauthorized Wells Fargo accounts, or the many other positive things the Bureau has done.