Consumer Law & Policy Blog

1 in, 2 out

Among the flood of Executive Orders over the past 8 days, and the uproar of the refugee ban, one important EO has not gotten much attention. Yesterday, Mr. Trump signed an order requiring agencies to repeal 2 regulations for every 1 they issue. The EO is flawed in many ways, and will be good for neither consumers, the environment, workers -- really anyone.You can read it here.

Public Citizen's Rob Weissman had this statement yesterday.

US News had this article. the gist of which is "The president's executive order on new regulations is absurd."

The LA Times is also critical, here.

The Consumerist gathers some of the criticism, here.

(Yes, I know that I have not posted any non-critical press.)

CFPB still at work

The Consumer Financial Protection Bureau yesterday took action "against a ring of law firms and attorneys who collaborated to charge illegal fees to consumers seeking debt relief. In a complaint filed in federal court, the CFPB alleges that Howard Law, P.C., the Williamson Law Firm, LLC, and Williamson & Howard, LLP, as well as attorneys Vincent Howard and Lawrence Williamson, ran this debt relief operation along with Morgan Drexen, Inc., which shut down in 2015 following the CFPB’s lawsuit against that company. The CFPB seeks to stop the defendants’ unlawful scheme, obtain relief for harmed consumers, and impose penalties."

The CFPB's press release is here.

Law360's Evan Weinberger: If CFPB Loses PHH Case, Trump's EO Requiring Elimination of Two Regs for Every New Reg Will Apply to CFPB

Here (behind paywall, I think). Excerpt:

The White House later confirmed to Reuters that the executive order did not touch independent regulatory agencies. * * *

That exclusion means that the Fed, the CFPB and other independent financial regulators, as well as the Dodd-Frank rules, are safe from the executive order for now. * * *

[I]f the CFPB is put under the executive branch [which would happen if PHH is not reversed], it will have to eliminate two rules for every new one, meaning that its mortgage rules or other regulations could be jettisoned in order to put in place payday lending, debt collection or other rules.

In an environment where Trump is expected to fire CFPB Director Richard Cordray, and is believed to be searching for a cause to do so, the executive order could serve as another way to “hamstring” the CFPB’s leader should the bureau lose in court, [Public Citizen's Amit] Narang said.

CNN: Trump pledges to 'do a big number' on Dodd-Frank Wall Street reform

by Jeff Sovern

Here.  Trump criticized Dodd-Frank on the campaign trail, but as far as I know still hasn't said very much about which aspects of the statute he would change.  Consequently, it remains unclear what his views of the CFPB are. While he complained about the difficulties small business have in getting loans from banks, small business loans are largely outside the CFPB's purview.  In related news, Trump today signed an Executive Order providing that government agencies must eliminate two regulations for every new regulation they issue, but it presumably wouldn't apply to independent agencies like the CFPB, FTC, FCC, or CPSC, though Trump's nominees to those agencies could pledge to abide by the Executive Order.  Still, the Executive Order would seemingly apply to consumer protection agencies that are not independent of the president, like the FDA, though I imagine that under Trump those agencies won't issue new regulations anyway.

Will Todd Zywicki Replace Cordray as CFPB Director?

So speculates Joseph Rubin in the American Banker here (free content).  Here is the paragraph with the speculation:

The Washington rumor mill has already focused on potential CFPB successors preferred by the Trump administration, such as Rep. Randy Neugebauer, R-Texas, and George Mason University professor Todd Zywicki. Both are critics of the CFPB, and would likely want to dismantle many of the CFPB's current initiatives.

Columbus Dispatch Report: Trump treasury pick Mnuchin misled Senate on foreclosures, Ohio cases show

Here.  Excerpt:

"OneWest Bank did not 'robo-sign' documents," Mnuchin wrote in response to questions from individual senators, "and as the only bank to successfully complete the Independent Foreclosure Review required by federal banking regulators to investigate allegations of 'robo-signing,' I am proud of our institution's extremely low error rate."

But a Dispatch analysis of nearly four dozen foreclosure cases filed by OneWest in Franklin County in 2010 alone shows that the company frequently used robo-signers. The vast majority of the Columbus-area cases were signed by 11 different people in Travis County, Texas. Those employees called themselves vice presidents, assistant vice presidents, managers and assistant secretaries. In three local cases, a judge dismissed OneWest foreclosure proceedings specifically based on inaccurate robo-signings.

* * *

Carla Duncan, a social worker from Cleveland Heights, was snared by OneWest's robo-signing machinery.

On her way out of town for a short trip in 2010, Duncan stopped by her home to get her mail and found a note from a field inspector for her mortgage company saying that her house was vacant and was going to be boarded up.

"It wasn't vacant. I was living there," Duncan said.

* * * "

What Duncan didn't know at the time was that OneWest had begun foreclosure proceedings on her three-bedroom home even though she was up-to-date on her payments. * * *

After hiring former Ohio Attorney General Marc Dann, waging a five-year court battle and filing personal bankruptcy, Duncan was finally able to get the foreclosures dismissed and keep her home and rental property. She said the experience was devastating.

"It's almost like being raped, like being emotionally violated," Duncan said. "It got to the point that I was afraid to open my own door."

Court records show that Duncan's mortgage was robo-signed by Erica Johnson-Seck, vice president of OneWest's department of bankruptcy and foreclosures. From her office in Austin, Texas, Johnson-Seck robo-signed an average of 750 foreclosure documents a week, according to a sworn deposition she gave in a Florida case in July 2009.

Under oath, Johnson-Seck acknowledged that she did not read the documents she was signing, taking only about 30 seconds to sign her name. * * *

i-Geniuses: Not Too Smart in Threatening Dissatisfied Customers

by Paul Alan Levy

i-Geniuses is a Houston company that repairs Apple products; it especially touts its ability to repair computers suffering from liquid damage on a fast turnaround schedule.  A number of former customers have expressed concerns about the success of the repairs, about longer-than-advertised repair times, and especially about their believe that the company is very slow to respond to questions from customers concerned about not getting their computers back in the expected time.

Rather than improve its practices, i-Geniuses has trod the now-familiar path of companies that try to clean up their reputations by threatening critics with lawsuits that impose the expense of defending their criticisms in court, not to speak of monetary damages.   The threats begin with emails from the company, telling consumers that they are not allowed to make public criticism and threatening to extract monetary fines.  (Note this followup as well, telling a consumer that his Yelp review constitutes a “digital tantrum.”) The company warns that if criticisms are not removed, the consumers will have to hire a Texas lawyer to defend them  (each of the consumers is more than 1400 miles from Houston) or face collection proceedings to enforce a default judgment.  The company sends out an “invoice” that purports to impose a charge of $2500 for each public criticism (so, for example, a consumer who placed criticisms in two locations got an invoice for $5,000), and sometimes another $250 for iGeniuses’s expense hiring a lawyer to write demand letters.  Finally,  consumers then receive a followup letter from such a lawyer, Christopher Cammack, insisting that they are in breach of a contractual commitment not to speak publicly and threatening to sue for breach of contract and libel. 

I have thus far received copies of three such letters (an example is linked here); each of the letters is dated December 29 and says, in virtually identical (and not entirely grammatical) language, that the reviews make false statements and have been made in breach of a contractual non-disparagement clause.  Each letter warns that if the critical review is not taken down by January 9, 2017, i-Geniuses will sue in Harris County, Texas.  The letters do not specify any false statements.

Danielle Beavers on Charges of Discrimination at CFPB: Consumer financial protection is under attack by phony claims

Here, in The Hill. Beavers is director of diversity and inclusion at The Greenlining Institute.  Excerpt:

Some critics—not previously known as leaders on diversity or civil rights—claim that the CFPB has become “a breeding ground” for discrimination that devalues employees of color and women.

As an advocate for diversity—and specifically as an advocate for communities of color—I have to call this out as the nonsense it is.

First, remember that predatory lending targeting communities of color played a huge role in creating the 2008 financial crisis. Congress created the CFPB—over the objections of banking industry lobbyists—precisely to keep such abuse from tanking the economy again.

And it’s working. 

* * *

The CFPB worked with the independent Office of Inspector General to investigate the workplace environment and conducted a series of employee townhalls to solicit feedback from its workers. CFPB also elevated its Office of Minority and Women Inclusion to report directly to Director Cordray.

* * *

In a letter this month, a group of Democratic members led by Rep. Maxine Waters (D-Calif) cited these successful efforts and praised the CFPB’s efforts

* * *

The CFPB had issues in this area and took strong steps to address them. As a result, when we analyzed racial diversity in eight financial agencies that have Offices of Minority and Women Inclusion, CFPB ranked third of eight. The bureau still has work to do, but it’s on the right track.

Complaints about diversity at the CFPB represent a smokescreen designed to distract from the real issue. * * *

NY Times: How to Buy a Used Car in an Age of Widespread Recalls

Here. Excerpt:

[L]ast month the Federal Trade Commission made it easier for cars to be billed as “certified,” even if they were under recall and hadn’t been fixed yet.

* * *

Buyers who wonder how safe it is to drive with a recalled Takata airbag and check the National Highway Traffic Safety Administration website will learn the following: “The vast majority of Takata airbags will perform as expected.” Oh, but: “Lives have been lost due to this defect.”

 

Dean Baker: The Economic Efficiency Argument for the Consumer Financial Protection Bureau

Here.  Excerpt:

The basic story is that if it's possible to make lots of money by using deceptive contracts to ripoff consumers, then many very talented and hard-working people will spend their time developing schemes to ripoff consumers. Instead of doing things that contribute to consumers' well-being (e.g. developing better products), these people will be committing resources to redistributing from others to themselves. If the government makes it more difficult to profit from the ripoff route, then people who want to make lots of money will be forced to turn to productive routes instead.

By this logic, weakening the CFPB, and other measures designed to protect consumers, gives more incentives to businesses to design elaborate ripoff schemes.