Consumer Law & Policy Blog

"Laziness isn’t why people are poor. And iPhones aren’t why they lack health care."

Responding to Rep. Chaffetz's statement suggesting that poor people cannot afford health care because they choose to buy iPhones, an op-ed by Stephen in the Washington Post explains that "the real reasons people suffer poverty don't reflect well on the United States."

The op-ed is here.

Nehf Article on Arbitration's Impact on the Common Law's Regulation of Standard Terms in Consumer Contracts

James P. Nehf of Indiana has written The Impact of Mandatory Arbitration on the Common Law Regulation of Standard Terms in Consumer Contracts, 85 Geo. Wash. Law Review (2017). Here is the abstract:

The focus of this paper is the regulation of standard terms in consumer contracts at common law, i.e., judges deciding cases in published opinions. In particular, I focus on the two most important common law doctrines in this area — unconscionability and good faith — and to a lesser extent on court decisions that interpret consumer statutes. They have all played a central role in regulating standard terms in consumer contracts over the years, yet their continuing role is being threatened by the proliferation of mandatory arbitration provisions in consumer contracts. If this trend continues, the ability of courts to further develop contract doctrine in consumer transactions may be severely limited. I begin with a discussion of the role that common law plays in regulating consumer transactions. I then discuss how the unconscionability and good faith doctrines have evolved as limitations on standard terms in consumer contracts. Next I discuss the increasing use of mandatory arbitration clauses in consumer contracts and the likely effects of this trend on consumer contract litigation. Toward the end of the paper, I explore what this might mean going forward if the common law of unconscionability and good faith in consumer contracts are essentially frozen in time, and if mandatory arbitration results in fewer published decisions interpreting and applying consumer statutes.

Read a new lawsuit alleging unfair competition by Trump and his new D.C. hotel and restaurants

The complaint is here. The plaintiff is a D.C. wine bar (Cork) that competes with Trump's new businesses. Here is an excerpt that gives you the gist:

Plaintiff's claims are based on the unfair advantage that the Trump International Hotel and its dining establishments, in a building owned by the United States and operated by the Defendants, has gained from Defendant Donald J. Trump being the President of the United States. That advantage is specifically prohibited by the hotel lease between Trump Old Post Office, LLC, and the United States, as well as the laws of the District of Columbia. The effects of that unfair advantage are magnified greatly by marketing activities of the Hotel's officers and employees and the similar activities of defendant Trump, his family, and the White House staff and/or advisors. * * * on November 9, 2016, the day after Defendant Donald J. Trump was elected President of the United States, the competition between the Hotel and Cork began to favor the Hotel much more than before the election, with the result that many organizations and individuals, including citizens of nations other than the United States, substantially increased their use of the Hotel and its various facilities to the detriment of Cork. ... The reason for the increase in business for Defendants was the perception by many of the customers and prospective customers of the Hotel, substantially aided by the marketing efforts of officers and employees of the Hotel, as well as members of the family of Defendant Donald J. Trump and others associated with him, that it would be to their advantage in their dealings with President Donald J. Trump and other agencies of the United States Government if they patronized the Hotel.

The president's working-class voters will be hit hard in the pocketbook by the ACA repeal, while the rich would gain

That's the gist of this article by John Harwood. Here's an excerpt:

Exit polls showed that just 10 percent of Trump's votes came from Americans earning $200,000 or more. Yet those voters would derive all benefits from the repeal of the two individual tax hikes targeting them: a 0.9 percent tax on their earnings, and a 3.8 percent tax on their investment income. An even smaller group, the top 1 percent of earners, would receive an average tax cut of $33,000, according to the Tax Policy Center. The top 0.1 percent of earners would receive an average tax cut of $197,000. *** Whites aged 45 or older provided 56 percent of Trump's votes. Older Obamacare enrollees would be hit particularly hard by the House bill because it curbs age-based insurance subsidies. Enrollees aged 55 to 64, the Cutler study found, would face higher costs averaging $6,971 in 2020.

Bloomberg's Gregory Roberts: CFPB’s Assault on Arbitration Stuck Between Rock, Hard Place

Here.  Excerpt:

Any move by the CFPB to adopt a final version of its rule would almost certainly prompt Republican lawmakers to overturn it, with a long-term chilling effect on future regulation of the clauses used by banks and other financial services providers.

But if the CFPB does not put out a final rule before the term of the bureau’s director, Democratic appointee Richard Cordray, expires in mid-2018, then whomever Republican President Donald Trump picks to lead the bureau isn’t likely to go ahead with the rule, anyway.

* * *

Stuck in what is likely to be a permanent state of limbo, consumer advocates can do little more than plead with companies to eliminate the clauses themselves, as a coalition of groups did in a Feb. 24 letter to Wells Fargo.

Bloomberg: House to Vote on Bills Limiting Class Actions This Week

Here.  Previous posts on the bills appear here and here. Excerpt:

The fast-track approach is deemed essential to give the bills time to advance in the more-deliberative Senate, where 60 votes are needed to overcome an almost certain filibuster.

* * *

With House passage almost certain, opponents and supporters are already turning an eye toward the more difficult path ahead in the Senate.

[Public Justice's Paul] Bland, an opponent, said the final tallies will be significant because of the implications for what happens in the upper chamber.

“If the Republicans lose any substantial number of members in the House, there’s a significant chance” that Senate Majority Leader Mitch McConnell (R-Ky) will “not want to waste much floor time on the bills,” he said.

Another analysis concludes that under the republican health care legislation lots of people would lose coverage

A new analysis finds that, under the proposed republican replacement for the ACA, 6 to 10 million would lose health insurance in the private market and, between 2020 and 2024, the Medicaid program would lose 4 to 6 million recipients. But health insurance industry profits would likely climb. Read about it here. 

Paul Bland in Daily Kos: Banning Class Actions Will Not Put “America First”

Here.  Excerpt:

Drywall from China was . . . highly toxic.

* * *

Approximately 60,000 homes built with drywall from China were affected, according to one source. In fact, the problems caused by this imported drywall are so massive and widespread that individual lawsuits could not have even begun to make a dent in the problem.  

Fortunately, many homeowners were able to seek a solution via class action suits that provided much needed financial compensation as well as helping to fix the underlying problem.

* * *

[P]roperty owners were essentially compensated for 100% of their losses

* * *

Under a new bill from GOP Congressman Bob Goodlatte now making its way through Congress, however, remedies like this would be made virtually impossible. The so-called “Fairness in Class Action Litigation Act” (a misnomer if ever there was one) would wipe away Americans’ ability to take on companies whose defective products put their health and safety at risk.

From dangerous drywall from China, to defective and harmful precription drugs – and nearly everything in-between – this sweeping legislation would essentially inoculate foreign companies flooding the American market with dangerous products from ever having to answer for their behavior in court. American consumers would be blocked from the courts in favor of boosting corporations’ bottom line.

 

Department of Education delays enforcement of rule on for-profit colleges

The Department of Education announced on  Monday that it will delay implementing new rules designed to punish career-training schools that leave students with high levels of debt but weak job prospects. The Wall Street Journal (subscription required) explains:

The move delays new rules known as “gainful employment” that formed a key piece of former President Barack Obama’s higher-education agenda. It could ultimately help for-profit colleges avoid sanctions if they prove the government data underpinning the rules is flawed.

The Education Department said Monday it will give schools until July 1 to file appeals, pushing back an original deadline of Friday. “This action is taken to allow the Department to further review the GE regulations and their implementation,” the agency said.

The rules are designed to cut off access to federal money for career-training programs if multiple classes of their graduates spend at least 20% of their discretionary income, as defined by a formula, or 8% of their total earnings each year, paying off student debt.

 

The Department's announcement is here.

Chris Peterson's Important Defense of the CFPB

It's titled Will Congress Remove Consumer Credit “Seat Belts”? and is in Democracy. The whole piece is worth reading if you care about the CFPB, but here's an excerpt to whet your appetite:

[I]f the CFPB really were a “runaway agency,” we should expect to see banks running from it. In every law enforcement case, the defendant is entitled to due process of law. Banks get to have to their day in court. So, how often have banks raced to the judicial branch to protect them from this Frankenstein monster? Dozens of times? A handful of cases? The answer is not even once. In order to be subject to CFPB enforcement, by statute, banks must have over $50 billion in capital. Although this kind of money buys access to the finest lawyers, in every CFPB enforcement case, banks signed a settlement agreement. This is not to say banks were always happy with the outcome. But neither are people that get speeding tickets. When money is on the line, the facts show that our most sophisticated and well-capitalized financial institutions did not want a judge or a jury—or the media attention that go along with them—to look at their case.

The truth is that the CFPB has faced criticism not because it is out of control, but because it is effective. If the CFPB were bringing crazy cases, hundreds of federal judges appointed by Republican and Democratic presidents would simply dismiss the agency’s complaints. And some of those judges would enjoy doing so. Too many of America’s financiers are betting it will be easier to strangle the watchdog than actually follow the rules or pay up when they make a mistake. And worse, too many politicians, pundits, and astroturf-think-tanks-for-the-wealthy want to score political points by taking down what may be the best recent example of a government actually doing really great work for the public. If cooler heads prevail, then we can hope in the coming years the CFPB’s no-nonsense approach to consumer protection will be as universally accepted as seat belts are today.