CL&P Blog

James Kwak on Economism and Arbitration Clauses

Here.  Excerpt:

It’s unlikely that anyone actually believes that consumers understand arbitration clauses and take them into account when making buying choices. These arguments aren’t meant to be taken seriously. They are air cover for banking executives who like taking advantage of customers and politicians who want to do favors for the financial lobby. That’s the purpose of economism, and why it continues to be so influential.

[Disclosure: He discusses my recent arbitration/Wells Fargo article at length.]

House to Consider Financial Choice Act Bill to Cripple CFPB Week of June 5

So says The Hill.

Massachusetts obtains judgment voiding hundreds of illegal loans to consumers in case against online auto title lender

Hundreds of illegal loans made to Massachusetts consumers by an unlicensed online auto title lender are now void pursuant to a judgment announced today by the Massachusetts Attorney General's office. The company has also been permanently barred from operating in Massachusetts, and liens they placed on vehicles have been dissolved with new titles issued to consumers.

The Massachusetts AG's press release is here.

MIT Technology Review: Google Now Tracks Your Credit Card Purchases and Connects Them to Its Online Profile of You

Here.  This is for offline credit card purchases. Surveillance capitalism indeed. Excerpt:

Google’s new ability to match people’s offline credit card purchases to their online lives is a stunning display of surveillance capitalism in action.

 

The capability, which Google unveiled this week, allows the company to connect the dots between the ads that it shows its users and what they end up actually buying. This is a crucial link for Google’s business that, for all of the company’s inventiveness, remains a matter of attracting users to its predominantly free services, collecting user data, and leveraging that data to sell advertising. If Google can show that someone who saw an ad for a furniture store in Google Maps, say, then went and made a big purchase at that store, the store’s owner is much more likely to run more ads.

Of course, Google has been able to track your location using Google Maps for a long time. Since 2014, it has used that information to provide advertisers with information on how often people visit their stores. But store visits aren’t purchases, so, as Google said in a blog post on its new service for marketers, it has partnered with “third parties” that give them access to 70 percent of all credit and debit card purchases.

My American Banker Op-ed: Would Wells scandal have come to light with a defanged CFPB?

Here.  Excerpt:

Wells Fargo’s opening of millions of phony accounts using the names of its customers was perhaps the most significant bank scandal to come to light since the financial crisis. But Hensarling’s Financial Choice Act, which passed the House Financial Services Committee, would have weakened federal regulators’ ability to publicize the scandal and punish Wells. * * *

If the bill had been enacted — and the consumer bureau were just a shell of the agency it is today — it is a fair question to ask whether Wells Fargo would have been held accountable for its actions.

The op-ed is based in part on my forthcoming Rutgers Law Review article.

Read one non-partisan analysis of Trump's budget

The non-partisan Committee for a Responsible Federal Budget has released this analysis of Trump's budget. Listed below are the Committee's five key findings. The first three seek simply to state what the Trump Administration says is coming, including the Administration's predictions of enormous economic and political success. The last two are the Committee's attempts to deal with reality.

• The budget proposes about $3.6 trillion of deficit reduction, including $1.5 trillion from largely unspecified discretionary cuts, $2.8 trillion in net mandatory cuts, $1 trillion less in revenue – mainly from repealing and replacing the Affordable Care Act (ACA) – and $300 billion in interest savings.
• According to the Office of Management and Budget (OMB), the budget would reduce debt from 77 percent of Gross Domestic Product ($14.8 trillion) today to 60 percent of GDP ($18.6 trillion) by 2027.
• OMB also estimates the budget will balance by 2027, down from a deficit of 3.1 percent of GDP ($603 billion) in 2017.
• To achieve balance, the budget projects spending will shrink from 21.2 percent of GDP ($4.1 trillion) today to 18.4 percent of GDP ($5.7 trillion) by 2027 and revenue will grow from 18.1 percent of GDP ($3.5 trillion) today to 18.4 percent ($5.7 trillion) of GDP by 2027.
• The estimates in the President’s budget are based on overly optimistic economic projections, which we recently estimated are responsible for $2.7 trillion of debt reduction. Using the Congressiona Budget Office's (CBO) growth numbers, we found debt under the budget would likely remain stable, and deficits would remain above 2 percent of GDP.
• The budget also relies on a number of unrealistic policy assumptions by assuming deep unspecified non-defense discretionary spending cuts and omitting any details on the President’s potentially costly tax plan.

Chris Odinet's PHH Oral Argument Report

Over at PropertyProf Blog.

Do the Terms of Service for Ancestry.com Give Consumers Reason to Worry?

This article at Think Progress points to some worrisome waivers in the terms of service for the DNA testing service at Ancestry.com.  Ancestry.com argues in response that the some of the concerns are overstated but that in any event it has revised its terms to meet some of the concerns.

"Education Secretary DeVos To Give All Student Loan Accounts To One Company; Strip Away More Protections"

The Consumerist has this article on recent and proposed changes to the Department of Education's student-loan program.

FTC and Florida halt "massive debt relief scam"

The FTC reports:

At the request of the Federal Trade Commission and the State of Florida, a federal court has temporarily halted a massive phony debt relief operation that bilked tens of millions of dollars from financially strapped consumers, including the elderly and disabled.

According to the FTC and Florida, Jeremy Lee Marcus, Craig Davis Smith and Yisbet Segrea, through 11 companies, got people to pay hundreds or thousands of dollars a month by falsely promising they would pay, settle, or obtain dismissals of consumers’ debts and improve their credit. Over time, victims found their debts unpaid, their accounts in default, and their credit scores severely damaged – some were sued by their creditors, and some were forced into bankruptcy.

The FTC and Florida allege that the defendants falsely claimed non-profit status to appear more credible and legitimate. The defendants then promised consumers guaranteed debt consolidation loans for tens of thousands of dollars with attractive interest rates and significantly lower monthly payments than consumers were paying their creditors. Once consumers agreed to the purported loan, the defendants almost immediately debited the consumers’ bank accounts for an initial loan “repayment” or a processing fee, and then kept debiting consumers’ bank accounts each month, in amounts ranging from $200 to $1,000 or more. The FTC and Florida charge that the defendants, despite taking these monthly payments, failed to extend consumers the promised debt consolidation loans.

The defendants also called people who were already enrolled with debt relief providers claiming they were taking over the servicing of those accounts and falsely claiming they would provide the same or similar services. Many of their victims had worked for years with their previous debt relief providers and had saved money in escrow accounts for use in negotiating with creditors. The defendants told these consumers to transfer their escrow money to defendants, and then debited up to $1,000 each month from the consumers’ bank accounts. Contrary to the defendants’ promises, people got little to nothing for their money and ended up in worse financial positions.

The full FTC press release, with a link to the court's order, is here.