Consumer Law & Policy Blog

New Books by Senators Elizabeth Warren & Al Franken: The Consumer Law Perspective

by Jeff Sovern

I recently listened to the audio versions of these two books, Al Franken, Giant of the Senate and Warren's This Fight is Our Fight: The Battle to Save America's Middle Class.  Each is read by the author. I enjoyed both thoroughly: they are inspiring, interesting, and Franken's is, as might be expected of a former Saturday Night Live writer, funny.  I am sorry to report, however, that even though both senators have played a role in consumer law, consumer law for some unknown reason does not take center stage in these books.  Warren's book has more on consumer law, just as her career has included more consumer law.  Among other things, she discusses the Wells Fargo scandal and how she came to call former Wells CEO John Stumpf "gutless" during a hearing on the scandal, in a widely-reported exchange.  Franken, a chief sponsor of the Arbitration Fairness Act, talks a bit about arbitration, but only a bit, and much of that is in connection with employment, especially by contractors in the Iraq war.  They clearly don't know how to boost sales.

I am normally wary of such books by politicians, but for balance, I am looking for a good one by a Republican that is relatively recent. If you have a suggestion please post it in the comments. It would have to be available in audio (most recent releases are), and discussions of consumer law are a plus.

Department of Education rescinding Obama-era rules aimed at forgiving student debt incurred because of for-profit college fraud

Announced by Department of Education head Betsy DeVos. Read the AP story and the New York Times story.

David Dayen's Take on Henson v. Santander

Here in The American Prospect.  Excerpt:

[The case] gave some of the worst bottom-feeders in the economy a free pass to break the law.

* * *

“It's almost a road map to me on how you can avoid the FDCPA,” says noted consumer bankruptcy attorney Max Gardner, who runs a boot camp for lawyers fighting predatory lenders. As an international bank, for example, Santander could easily argue that its principal purpose is not debt collection, but originating loans. Other debt buyers could follow the “Santander defense.”

* * *

April Kuehnhoff, an attorney with the National Consumer Law Center [says] “Now consumers are not going to know whether this person calling them is covered or isn’t covered [by the act]. I think it raises a lot of difficulty in private enforcement.”

Kuehnhoff adds that Congress needs to get involved right away to fix this newly created hole, rather than wait and see how the industry adapts. Indeed, that was Justice Gorsuch’s conclusion as well, that Congress could merely update the statute by applying it to debt buyers to reflect the changing times. Max Gardner believes that’s a pipe dream with the current Congress. “That’s going to happen as soon as Trump reveals his tax returns,” he says.

LA Times's David Lazarus: Trump wants to deny nursing-home residents and their families the right to sue

Here.  It's another excellent column.  Excerpt:

Let’s say your elderly parent was neglected or abused in a nursing home. In the past, your only recourse might have been arbitration, rather than going to court.

But thanks to a rule put in place last fall by the Centers for Medicare and Medicaid Services, nursing homes that receive federal funding — which is most of them — could no longer include so-called mandatory arbitration clauses in their contracts. * * *

Now the Trump administration is trying to get rid of that protection.

Under-new-management CMS released a proposed rule last week that would rescind the earlier rule and once again make forced arbitration the industry standard.

* * *

With delicious irony, the American Health Care Assn., a leading nursing-home industry group, filed a lawsuit last fall challenging the federal government’s authority to tell the industry it can’t block people from filing lawsuits.

Treasury Report Recommending Restraints on CFPB Now Out

Here.  On a quick look, it looks less bad than the Financial Choice Act--but still bad.

SCOTUS Rules Unanimously: Debt Buyers Not Debt Collectors Under FDCPA

by Jeff Sovern

The decision in Henson v. Santander is here.  A debt buyer could still qualify as a debt collector under the FDCPA if debt collection is the "principal purpose" of its business, under 1692a(6), but if collections is not the principal purpose of its business, as is true of Santander, it will not be subject to the FDCPA under Henson. I wonder if we will see debt buyers merge with other businesses so collection becomes only a part of their business, and they can evade the FDCPA.  As a policy matter, it is difficult to justify treating debt buyers differently from debt collectors, and when Congress becomes more protective of consumers, we might see a legislative fix to this problem.  But Congress probably did not anticipate the debt buying industry back in 1977 when it wrote the law, and so didn't address debt buyers in the text of the statute. The decision was unanimous, and was Justice Gorsuch's first decision for the Court. His first sentence: "Disruptive dinnertime calls, downright deceit, and more besides drew Congress’s eye to the debt collection industry." Evidently, he likes alliteration.

 

Prentiss Cox et al Op-ed: Why we must not gut consumer protections

Here, in Minnesota's Star-Tribune. Prentiss wrote it with two other original members of the Bureau's Consumer Advisory Board, Jose Quinonez and William Bynum. Excerpt: 

Have you ever been an eyewitness to an event and later seen it written about in a way that directly contradicts your experience? As three people who witnessed close-up the Consumer Financial Protection Bureau as it began its work after the worst financial crisis since the Great Depression, we are having that sensation as lawmakers in Congress rationalize their proposed evisceration of the agency.

* * *

What we saw as the CFPB developed was an extraordinary effort to move effectively and carefully to prevent the abuses that led to the financial crisis. The CFPB sought varied advice on every rule and policy it adopted. We were impressed time and again at how the agency carefully weighed market impacts and tried to understand how complex financial regulatory choices would impact everyday consumer decisions. * * *

* * *

The Financial Choice Act, * * * would hobble the CFPB’s ability to attack unfair and deceptive practices, allegedly because this authority is “opaque and ill-defined.” This is the exact same law enforced by the Federal Trade Commission to protect consumers for 80 years and the most commonly invoked authority of state attorneys general in consumer protection enforcement. The CFPB has used this authority extensively in returning over $12 billion to consumers who were deceived or treated unfairly by banks and other financial institutions.

                                 

WSJ: Treasury Report to Call for Curbs on CFPB, CRA

Here. Excerpt:

[The report] is harshly critical of the Consumer Financial Protection Bureau and recommends that the bureau be stripped of its authority to examine financial institutions, people familiar with the matter said. By law, the bureau has the authority to enforce consumer laws as well as to examine individual firms on a continuing basis.

One person familiar with the report’s contents said it is likely to recommend that the CFPB continue to be led by a single director, but that the president be able to remove the director at will. * * *

* * *

The report is expected to set in motion a re-evaluation of the Community Reinvestment Act, a law intended to make sure banks meet local credit needs, people familiar with the matter said.

The report is in response to a Trump executive order.  Some of its proposals would require congressional action to be adopted.

Law360's Evan Weinberger: CFPB Could Avoid Fight With New Debt Collection Plan

Here.  We reported on the plan to separate debt collection regulation into two rules on Thursday. Weinberger reports on speculation on the Bureau's motivation in proceeding in that fashion:

But doing the less controversial update of debt collection communications and disclosures first could also potentially allow the CFPB to avoid any rule getting invalidated by a Republican Congress through the Congressional Review Act, since there is wide agreement among consumer advocates and the industry that those rules need to be updated, said Jonathan Pompan, a partner with Venable LLP.

* * *

The FDCPA technically only covers third-party collectors, but those firms rely on information provided by banks and other debt issuers, so any CFPB rule would have to extend the FDCPA. That would be contentious and could bring in opposition from the entire financial industry, said Margot Saunders, an attorney with the National Consumer Law Center.

And that level of opposition could lead to Republicans in Congress using the Congressional Review Act to invalidate the rule, she said.

"I think that is likely to be their reasoning. And I think that it's a whole lot easier to take on the debt collectors than the entire consumer financial services industry," she said.

* * *

Taking on issues around when a debt collector can call a cellphone and other similar questions might not engender as much of a response from lawmakers, particularly since debt collection firms have been seeking clarifications, Pompan said.

"Modernization has been championed by virtually all segments of the industry for many years now and would significantly benefit not just market participants, but consumers," he said.

Trump Tweets on the Financial Choice Act

by Jeff Sovern

Here's his tweet:  

Donald J. Trump

 

✔ @realDonaldTrump

Congratulations to Jeb Hensarling & Republicans on successful House vote to repeal major parts of the 2010 Dodd-Frank financial law. GROWTH!