Consumer Law & Policy Blog

Consumerist: Wells Fargo Tries, Fails To Explain Why Customers Shouldn’t Be Allowed To Sue Over Fake Accounts

Here. 

Send to Email Address Your Name Your Email Address

 

Cancel

Post was not sent - check your email addresses!

Email check failed, please try again

Sorry, your blog cannot share posts by email.

 

CFPB Director Cordray's CNBC Interview

Here.  Excerpt:

[John] Harwood: The Wall Street Journal wrote an editorial, said your agency is lawless. Ben Sasse of Nebraska, who is an independent-minded senator, refers to you as King Richard. People say, "He's a dictator." What do you say?

Cordray: First of all, I think it's completely ill-founded. There's never specifics in those kinds of claims. But what I would say is, accountability is really at the heart of this agency. We're all about holding financial companies, large financial companies, accountable for complying with the law and treating people fairly.

Harwood: Do you not accept that you need to be accountable to someone in government who is elected by people?

Cordray: Sure. We are accountable. I have to be accountable to Congress; I have to testify in front of them four times a year. I'm accountable to the courts; they oversee what we do. And if we get something wrong, we fix it, just like everybody else does.

Harwood: Doesn't accountability mean that somebody in government above you can fire you or change your budget?

Cordray: Well, what they can do is replace you from time to time. That's the way the independent agencies work. Nobody's talking about firing Janet Yellen at the Federal Reserve. Nobody's talking about firing other independent agency heads. That's the principle of our government.

* * *

Harwood: Have you talked to anyone senior at the White House about talking to the president?

Cordray: I have not had a chance to talk to the president.

Harwood: People like Reince Priebus, the chief of staff, or Steve Bannon?

Cordray: Well, look. I have made it clear and I'll make it clear here to you that I'm quite happy to sit down and talk to anybody. Love to have the chance to talk to him about our work, hear whatever criticisms or other points of view they may have, and try to talk those through. I think we can reach a lot of common ground in terms of protecting consumers.

I wish Harwood had followed up on that because it would be interesting to know if the White House has been in touch with the Director.

WSJ: Key GOP Lawmaker: Commission Could Be Compromise in CFPB Overhaul

Remember how House Financial Services Committee Chair Jeb Hensarling said last month that he wanted to change the CFPB's structure to one headed by a single director reporting to the president?  Well, now the WSJ is reporting that Rep. Blaine Luetkemeyer of Missouri, chair of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, which has oversight of the CFPB, predicts that the Bureau will switch to a commission structure. The article, behind a paywall is here, and here is an excerpt:

“I think when the bill goes to the Senate, what you will see is a compromise down to the commission,” Mr. Luetkemeyer said in a speech to executives gathered in Washington for a Credit Union National Association conference.

He explained that such a compromise will be necessary to gain the support of some Democrats, in order to gather the 60 votes needed to pass the legislation in the Senate.

* * *

The broad House financial deregulation bill, known as the Choice Act, will likely pass the House floor “over the next two to three months,” Mr. Luetkemeyer said, adding that he hopes it then reaches the Senate.

Rep. Jeb Hensarling (R., Texas), chairman of the House Financial Services Committee and lead author of the bill, said at the [Credit Union National Association] conference that the legislation will be introduced soon.

 

 

Paul Bland in HuffPo: House GOP’s Bill to Eliminate Nearly All Class Actions Would Encourage More Ponzi Schemes & Other Corporate Cheating

Here.  Excerpt:

[E]nter Congressman Bob Goodlatte (R-Corporate Lobbyist Heaven), with his ironically titled “Fairness in Class Action Litigation Act,” which passed through the House Judiciary Committee two weeks ago. Its passage was a remarkable feat of avoiding public notice or debate, with Goodlatte ramming through the legislation in the middle of the night, voting down all amendments along party lines, and refusing to even hold a hearing on the bill, which had at least ten new provisions never included in the previous version passed by the Committee.

Now, the bill is expected to be voted on by the full House next Tuesday.

Goodlatte’s bill was drafted by corporate lobbyists to eliminate the vast majority of class action lawsuits. It would roll back protections for defrauded investors, cheated consumers, people whose privacy has been violated, small businesses harmed by price fixing, workers cheated by wage theft, and pretty much anyone harmed in any way by corporations that break the law.

What Vast Experience? Heritage Foundation Report: FTC Should Absorb CFPB Powers, Citing FTC's Supposed "vast regulatory experience in . . . consumer financial markets"

by Jeff Sovern

Here.  Here's something they say about transferring the Bureau's authority to the FTC: 

Transferring all federal consumer protection authority to the Federal Trade Commission, the agency with vast regulatory experience in assessing practices affecting consumer financial services markets, would dramatically improve the federal regulatory framework for consumer financial protection.

Maybe Heritage should have paid closer attention to the limits to the FTC's power spelled out in 15 U.S.C. section 46(a) (emphasis added): "The Commission shall also have power . . . To gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce, excepting banks, savings and loan institutions described in section 57a(f)(3) of this title, Federal credit unions . . . ."

And for a bonus, here is an excerpt from the report (footnotes omitted) on the causes of the Great Recession:

Reckless lending did play a role in the crisis, but the reality is that millions of lenders and borrowers were responding rationally to incentives created by an array of deeply flawed government policies, including artificially low interest rates contrived by the Federal Reserve, the massive subsidy of risky loans by Fannie Mae and Freddie Mac, and the low-income lending quotas set by the Department of Housing and Urban Development.

Perhaps Heritage should also have paid closer attention to the report of the Financial Crisis Inquiry Commission. 

Trans-atlantic consumer forum convening in DC on March 21

by Paul Alan Levy

The Trans-Atlantic Consumer Dialogue, a coalition of nearly 100 consumer organizations on both sides of the Atlantic, will be holding its annual meeting in DC from March 19 to March 21, including a public forum on March 21 addressed to "A consumer agenda for transatlantic markets.” The program includes features officials of both federal agencies of the United States and European Union officials as well as leaders and experts from  several major consumer groups on both sides of the pond.  Here is the link for free registration for the event.

Do False Claims Act suits deter off-label drug promotion?

That's the topic of Relinquishment of Inappropriate Off-Label Uses: The Effect of the False Claims Act by lawyer-economist Elissa Philip Gentry. Here is the abstract:

Off-label drug prescription—the prescription of drugs for unapproved uses—relies on physicians to distinguish appropriate uses of drugs from inappropriate uses, based on available scientific evidence. In practice, however, information regarding the appropriateness of off-label uses is often sparse or ambiguous. Pharmaceutical companies are sued under the False Claims Act (FCA) for off-label promotion; these suits often reveal information regarding the appropriateness of the off-label use. This paper examines whether FCA suits can serve as a source of such information and spur relinquishment of inappropriate off-label uses. This paper first estimates the average effect of multiple FCA settlements on prescriptions and finds that FCA settlement leads to significant relinquishment of off-label uses. This paper then conducts a case study of one focal FCA case to identify heterogeneity in relinquishment by payer and information source. The results suggest that legal incentives may lead to increased heterogeneity in relinquishment by payer and that relinquishment seems more affected by FCA suit than by publication of new scientific information. These results suggest that FCA suits can help to spread information regarding appropriateness of off-label uses and call into question some of the expectations underlying current off-label regulation.

Mandatory pre-dispute arbitration, secrecy, and allegations of widespread sexual harassment

by Brian Wolfman

Drew Harwell has penned this powerful article about allegations of widespread sexual harassment against the massive jewelry seller Sterling Jewelers (the corporate conglomerate behind the chain known as Galleria of Jewelry and Kay Jewelers). The article is based in large part on about 250 sworn affidavits from workers at the jewelry chain. The affidavits depict a culture of severe and pervasive sexual harassment by male managers perpetrated on women in subordinate jobs.

The allegations were made in an arbitration proceeding, not in court. That's because, according to the article, "[s]ince 1998, Sterling has forced all employees to agree to arbitration — a no-judge, no-jury resolution system that allows companies to keep potentially embarrassing labor disputes and case records mostly confidential."

As just indicated, one of the typical attributes of arbitration is secrecy. So, for example, discovery of relevant information, to the extent there is any discovery, is secret. And the arbitrator's decision is almost always secret. The fact that there is an arbitration at all is often kept under wraps as well. This is why we often hear that disputes with a particular company are subject to "private arbitration."

To be sure, court secrecy is a problem too. Too many documents are filed under seal, and cases -- even cases with significant implications for the public -- are settled under "gag" provisions that prevent the parties from talking about the case.

But almost all court complaints are publicly filed, and so the allegations are freely available to the public. Parties are generally free to talk to other people, including the press, about a pending case. And virtually all judicial decisions are public the minute they are issued. Not so, as I say, with arbitration.

How bad was the secrecy in the Sterling sexual harassment arbitration? According to Harwell, the Sterling arbitration was filed in 2008. Apparently, some documents about the case became public last April. Harwell's article appeared the day before yesterday.

(More info: Go here to view a video about the Sterling case and here to read about the corporate response to the allegations.) 

What will a Trump administration OSHA look like?

I've seen little public discussion over what the federal government's workplace watchdog -- the Occupational Safety and Health Administration -- will look like in a Trump administration. This piece by Tom Musick addresses that question, and not surprisingly it looks like we are in for less regulation of workplace hazards. Musick also notes that "Trump’s limited-regulation stance, coupled with his experience in construction and other industries [which are subject to OSHA regulation], suggest to some that he will steer OSHA more toward compliance assistance and away from enforcement." This passage in particular caught my attention:

[OSHA's] injury and illness electronic recordkeeping rule could be among the first items that Trump targets, according to [D.C. lawyer Eric] Conn. The rule requires many employers to electronically submit injury and illness data, which may then be published on OSHA’s website. Anti-retaliation protections also are included in the rule, which prohibits employers from discouraging workers from reporting an injury or illness. The rule has drawn sharp criticism from some employers, who claim it is burdensome and unnecessary. In July, eight industry groups – including the National Association of Manufacturers and Associated Builders and Contractors – filed a legal challenge to block the rule, claiming the anti-retaliation provisions unlawfully banned or limited safety incentive programs and post-incident drug testing. A judge denied the motion in November. “I could easily see, at the very least, a Trump administration curbing the publishing of that data,” Conn said. “And the other side of that same rule is the anti-retaliation elements that would prohibit some post-incident, post-injury drug testing and safety incentive programs. I could see that rule being curbed.”