Consumer Law & Policy Blog

Enabling Facebook Users to Protect Their Free Speech Rights

by Paul Alan Levy

An important appeal is pending in the District of Columbia Court of Appeals – the highest appellate court in D.C. The federal government served D.C. warrants on Facebook, demanding access to the entirety of 90 days worth of communications in three separate Facebook accounts, including identifying information.  (Presumably, the reason why the case is in local court rather than federal district court is that D.C. felonies are prosecuted in the local courts but by the federal government).  The warrant arrived with a court order forbidding Facebook from disclosing the existence of the warrants to the users so that they could seek judicial protection against the invasion of their free speech rights.  It appears that the warrant was issued by a trial-level judicial officer, that a motion to quash the non-disclosure warrant was denied, and that Facebook appealed.  We know all of this because Facebook was allowed to issue a court-approved notice inviting possible amicus briefs in support of its position.   Other than the court-authorized notice, we don’t know anything about the facts of the case because the entire record is under seal, including the rulings below and Facebook’s own appellate brief.  We do not even know whether Facebook ever sought to block enforcement of the warrants on grounds other than its inability to notify the Doe targets of the subpoena of the assault on their privacy, whether there has been any ruling on the merits of the warrants, or whether Facebook has appealed from any such order.  In fact, the existence of the appeal could not be found on a search of the DC Court of Appeals online docket – the Clerk’s Office confirmed to me this afternoon than outsiders are not supposed to be able to see the case.  The statement of facts in the court-approved notice indicates that the denial of the motion to quash the non-disclosure order also ordered compliance with the warrants, but that this obligation has been stayed pending this appeal.  

Public Citizen has joined an amicus brief prepared by  the ACLU and the ACLU of D.C., supporting Facebook’s appeal. 

Appropriations Bill That Would Harm the CFPB and Consumers Passes House Appropriations Subcommittee

by Jeff Sovern

Next stop should be the full committee, then the House floor. 

The House Appropriations Bill Is Much Worse for Consumers Than Originally Reported

by Jeff Sovern

We posted yesterday about the House Appropriations Bill. I haven't studied the bill, but on a quick look, it contains a number of objectionable provisions from the Financial Choice Act (already passed by the House), including repeal of the CFPB's power to regulate arbitration and payday lenders and to block conduct on the ground that it is deceptive, unfair, or abusive (UDAAP authority). It also eliminates the Bureau's supervisory authority.  More from Law360's Evan Weinberger here. By attaching these provisions to the appropriations bill, which is very likely to pass in at least some form, their supporters increase their chances of getting something through Congress, even if the Financial Choice Act fails of passage.

More on the House Appropriations Bill That Would Make the CFPB More Accountable to Lobbyists

by Jeff Sovern

From The Hill. Excerpt:

A spending bill released Wednesday by the House Appropriations Committee includes major restraints for financial regulatory agencies. * * *

Including the provisions in the spending bill, which is must-pass legislation, increases the odds they could become law.

The measure places the Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau (CFPB), National Credit Union Association, Federal Housing Finance Agency, the Office of the Comptroller of the Currency and regulatory functions of the Federal Reserve under the congressional appropriations process.

For more on why this measure would make the CFPB accountable to lobbyists, see here.

Report Finds Some Arbitration Providers Not Complying with California Arbitration Reporting Law

Here. From the Executive Summary:

32 firms appear to be offering consumer arbitration services in California. Of those, only 11 firms follow the substantive requirements of §1281.96(a) , and of those, only three firms can be said to evidence robust and full compliance with the statutory regime, including §1281.96(b)’s formal requirements as to format, timing and depth of reporting.

Some 12 firms self-reported to us that they were not covered by §1281.96, either due to not performing arbitration services, or for other reasons. 9 firms did not respond to our emails or phone calls; they may not be in business any longer.

 

Can the California Anti-Arbitration Bill Survive FAA Preemption?

by Jeff Sovern

Reuters reports that the bill has passed an Assembly committee, and is expected to pass the Assembly in August (the state Senate has already passed it).  Here's the part I don't understand: if California enacts the law, how can it avoid being preempted under the Federal Arbitration Act, as SCOTUS has interpreted it?  Or is the goal here something else?  I would be grateful if someone could post a comment answering those questions.

Can This Be True? Debt Collector Reported to Seek $77,000 on Original Debt of $145

Here.

Politico: GOP Wants to Use Reconciliation to Bring CFPB's Funding Under Congressional Control

by Jeff Sovern

Here.  Using reconciliation would make the bill filibuster-proof, but would require the Republicans to lose no more than two of their number, assuming no Democrats voted in favor of the bill. 

Arbitration rule at the Department of Education is under attack

In case you missed it earlier this month, the Trump Administration has indicated it will turn its back on another Obama-era rule, this time at the Department of Education (ED). In November 2016, ED announced a new rule to protect federal student loan borrowers who are victims of fraud and other misconduct by predatory schools, often in the for-profit college industry. Among the rule’s important provisions is a requirement that any school participating in the Federal Direct Loan program agree not to rely on or enforce predispute arbitration agreements with students for the resolution of claims related to the Direct loans or the education financed by those loans.

An industry group sued to stop the rule last month, and on June 16, ED formally announced that it would delay the rule’s July 1 effective date, using the ongoing litigation as cover for the delay. The agency also announced that it would undertake a new rulemaking in what it’s calling a “regulatory reset.”

On behalf of two borrowers who would benefit from the Obama-era rule’s provision regarding forced arbitration, Public Citizen and the Project on Predatory Student Lending moved to intervene as defendants in the industry challenge to the rule, arguing—as is evident at this point—that the Trump administration can’t be trusted to represent the borrowers' interests.

A copy of the motion is here.

CFPB acts against credit repair companies for charging illegal fees and misleading consumers

Still at work, the Consumer Financial Protection Bureau today filed two complaints and proposed final judgments in federal court against four California-based credit repair companies and three individuals for misleading consumers and charging illegal fees. The CFPB alleges that the companies charged illegal advance fees for credit repair services, and also misrepresented their ability to repair consumers’ credit scores.

Under a proposed final judgment, Prime Credit, LLC, IMC Capital, LLC, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel would pay a civil money penalty of more than $1.5 million. Under a second proposed final judgment, Park View Law, known formerly as Prime Law Experts, Inc., and its owner Arthur Barens would pay $500,000 in relinquished funds to the U.S. Treasury.

The CFPB's press release, with links to the two complaints and proposed final judgments, is here.