Consumer Law & Policy Blog

"The Doctor Is In. Co-Pay? $40,000."

That's the name of this article by Nelson Schwartz. It describes the concierge doctors and high-frills medical care available, without significant wait times, to very wealthy people willing to pay steep prices. It contrasts that with what the non-rich get. (For instance, wait times for doctor appointments have been going up in recent years in most places.) 

Can criminal-justice debt abuse be combated through consumer law-type reforms?

That's the topic of Fighting Fines & Fees: Borrowing from Consumer Law to Combat Criminal Justice Debt Abuses by law prof Neil Sobol. Here is the abstract:

Although media and academic sources often describe mass incarceration as the primary challenge facing the American criminal justice system, the imposition of criminal justice debt may be a more pervasive problem. On March 14, 2016, the Department of Justice (DOJ) requested that state chief justices forward a letter to all judges in their jurisdictions describing the constitutional violations associated with the illegal assessment and enforcement of fines and fees. The DOJ’s concerns include the incarceration of indigent individuals without determining whether the failure to pay is willful and the use of bail practices that result in impoverished defendants remaining in jail merely because they are unable to afford bail.

Criminal justice debt, also known as legal financial obligations (LFOs), impacts not only those incarcerated but also millions of others who receive economic sanctions for low-level offenses, including misdemeanors and ordinance violations. LFOs, which include bail, fines, and fees, are imposed at every stage in the justice process, including pre-conviction, sentencing, incarceration, and post-release supervision.

Werner & Peterson Op-ed: Wells Fargo case shows how fine print can erode freedom

Here.  Excerpt:

On June 7, a Utah judge will decide whether more than 50 consumers defrauded by banking giant Wells Fargo in its fake account scandal will be forced to pursue claims one by one in a secret arbitration system. Even as the bank’s PR machine loudly trumpets a focus on restoring consumer trust, Wells Fargo is insisting once again that defrauded customers should be barred from having their day in court.

* * *

A recent report from the nonprofit Level Playing Field found just 215 Wells Fargo customers pursued claims against the bank in arbitration since 2009, despite millions of fake accounts exposed by the CFPB. Looking at the numbers, it is not surprising so few consumers file. Of the 48 cases that advanced to a final hearing, only seven consumers in eight years received a dime from Wells Fargo with the bank paying out just $349,549. Indeed, consumers paid more restitution to Wells Fargo in arbitration than the other way around.

 

House Expected to Vote on Financial Choice Act, Bill to Cripple CFPB, by Friday

The House Rules Committee voted to permit House consideration last night. The Hill story is here.  Excerpt:

The House Rules Committee on Tuesday night cleared for a vote on the House floor a Republican effort to strip much of the Dodd-Frank Act.

The powerful panel -- the last stop for every bill considered by the House -- cleared the Financial CHOICE Act 9-4 along party lines and with few amendments. The full House is scheduled to vote on the bill by Friday morning, and it is expected to pass it without Democratic support.

Trump to Nominate Banker Joseph Otting to head OCC

The OCC regulates national banks and has some power over consumer protection issues. The Financial Times has the story here. Excerpt: 

If confirmed by the Senate, Mr Otting is likely to be “a reliable ally” for Mr Mnuchin and “a steady proponent for bank deregulation”, said Isaac Boltansky, analyst at Compass Point in Washington.

Jeanette Quick: Washington's quiet revolution to destroy consumer protection

Here, in The Hill.  Quick served as senior counsel to the Senate Banking Committee and senior attorney for OCC.  Excerpt:

Trump is well on his way to effecting change in financial regulation through his appointments, and Congress appears poised to stall new financial regulation through changes to the rulemaking process, most significantly through the Regulatory Accountability Act (RAA).

 Many proposals to “reform” the rulemaking procedures are designed to hinder regulation, just as many agency heads are selected to prevent their agencies from regulating. As Steve Bannon has stated, “Cabinet appointees ... were selected for a reason and that is the deconstruction [of the administrative state] ... the way the progressive left runs, is if they can't get it passed, they're just gonna put in some sort of regulation ... in an agency ... that’s why this regulatory thing is so important.”

 

FTC and Florida take action against robocall ring that pitched worthless credit card rate-reduction programs

The Federal Trade Commission announced today that, in a case filed by it and the Florida Office of the Attorney General, a federal district court judge has entered eight orders against an intertwined web of Orlando-based individuals and companies that bombarded consumers with illegal robocalls from “Card Member Services,” pitching worthless credit card interest rate reduction programs.

In addition to imposing financial judgments, the orders permanently ban most of the defendants from robocalling, telemarketing, and providing debt relief services. The FTC alleges the scheme operated from 2011 until the court issued injunctions at the agencies’ request stopping the calls in mid-2015.

According to the complaint, filed in June 2015, the defendants, doing business as Payless Solutions, illegally called thousands of consumers nationwide – including many seniors – claiming that their credit card interest rate reduction program would save consumers at least $2,500 in a short period of time and would enable them to pay off their debts more quickly. After convincing consumers to provide their credit card information, the defendants charged them between $300 and $4,999 up-front, but provided nothing in return.

The FTC's full press release is here.

Department of Education considers delaying two important regulations

Politico reports today that the Department of Education is considering delaying two rules that are scheduled to go into effect on July 1 -- the borrower defense rule, which concerns student loans, and the gainful employment rules, which cuts off federal funding for for-profit colleges that provide students with more debt than benefit. The article is here.

Freeman Article: Racism in the Credit Card Industry

Andrea Freeman of Hawai'i has written Racism in the Credit Card Industry, 95 North Carolina Law Review 1071 (2017).  Here's the abstract:

In a social and financial climate characterized by deep racial and socioeconomic divide, racism against credit card applicants and consumers is a core piece of the systemic inequality that perpetuates dramatic disparities in wealth, employment, health, and education. Over several decades, credit cards have evolved into an essential tool for lower- and middle-class families to maintain financial stability through strategic balancing between debt and disposable income. Now, without a credit card, many households cannot manage to meet the basic needs of their families. Credit card companies take advantage of this reality, imposing exploitative fees, interest rates, and other conditions on consumers who have no choice but to use the companies’ products. Even worse, the companies do so in a racially discriminatory way, burdening Black and Latino customers with the worst credit card terms, often unrelated to credit risk. This type of consumer racism dates back to the Reconstruction era and reflects an unbroken chain of laws and policies cementing racial economic inequality. Social norms and stereotypes make the resulting inequality appear cultural and personal instead of systemic and structural.

This Article is the first to apply a critical race theory analysis to the problem of racism against credit card consumers. After describing the role that history and stereotyping play in allowing credit card corporations to discriminate against consumers, it identifies fatal flaws in the two laws designed to address racial discrimination and inequality in credit, the Equal Credit Opportunity Act and the Community Reinvestment Act. It then proposes amendments to the Consumer Accountability Responsibility and Disclosure Act based on rehabilitative reparations theory and slavery disclosure laws that would require credit card companies to make significant investments into the communities they harm.

Times Article Reports How Mylan Still Charges $609 for EpiPen With $1 of Medicine

The headline is Outcry Over EpiPen Prices Hasn’t Made Them Lower.  Excerpt:

By August, the company, which sells thousands of drugs and says it fills one in every 13 American prescriptions, was making mea culpas and renewing its promise to “do what’s right, not what’s easy,” as the company’s mission statement goes.

* * *

To understand Mylan’s culture, consider a series of conversations that began inside the company in 2014. * * * (Former executives who related this and other anecdotes requested anonymity because they had nondisclosure agreements or feared retaliation. Aspects of their accounts were disputed by Mylan.) * * *

* * * At one gathering, executives shared their concerns with Mylan’s chairman, Robert Coury.

 

Mr. Coury replied that he was untroubled. He raised both his middle fingers and explained, using colorful language, that anyone criticizing Mylan, including its employees, ought to go copulate with themselves. Critics in Congress and on Wall Street, he said, should do the same. And regulators at the Food and Drug Administration? They, too, deserved a round of anatomically challenging self-fulfillment.

* * *

Those top leaders’ responses are a far cry from the message on Mylan’s website, which says that “we challenge every member of every team to challenge the status quo,” and that “we put people and patients first, trusting that profits will follow.”

But Mylan is a prime example of how easy it is for leaders to say one thing publicly and act differently in private.