Consumer Law & Policy Blog

Supplement sellers settle false advertising charges with FTC and Maine

A health products company called Health Research Laboratories and its owner Kramer Duhon have agreed to settle charges by the Federal Trade Commission and the State of Maine that they deceived consumers with promises that their products could treat everything from arthritis to memory loss. The proposed federal court order announced today bars the defendants from engaging in a wide range of business practices that the agencies allege have caused financial injury to consumers.

According to the agencies’ complaint, the company and its owner marketed two of their products, BioTherapex, a dietary supplement that purportedly targets the liver to address a host of ailments, and NeuroPlus, a brain supplement, using a variety of false and unsupported claims.

The FTC's press release, with relevant links, is here.

Professor Chris Peterson's study on why the republican version of the CFPB -- contained in the Financial Choice Act of 2017 -- would be bad for consumers

If you want to learn what the CFPB would look like if republican plans to defang it were enacted, law prof Chris Peterson has done a study for you: Choosing Corporations Over Consumers: The Financial Choice Act of 2017 and the CFPB. Here is the abstract:

The Consumer Financial Protection Bureau (CFPB) is the U.S. Government’s primary regulator and civil law enforcement agency governing consumer lending, payment systems, debt collection, and other consumer financial services. Created in the wake of the financial crisis, Congress tasked the agency with stopping deceptive, unfair, and abusive consumer finance. However, Congress is currently considering legislation which would significantly change the CFPB’s law enforcement authorities. This Article analyzes the proposed Financial Choice Act of 2017 which would rename the CFPB, and eliminate many of the CFPB’s law enforcement powers. If the Financial Choice Act were the law of the United States from 2012 to 2016, how would the CFPB’s enforcement track record have changed? Drawing upon pleadings, consent orders, settlement agreements, press releases, and other public documents, this Article presents an empirical study of every publicly announced CFPB enforcement case to determine what law enforcement cases and awards would have been eliminated had the bill been law. Among the study’s findings, had the Financial Choice Act had been adopted in 2012 it would have eliminated:

• Over 91 percent of consumer restitution for illegal home mortgage lending practices, amounting to $2.7 billion dollars;
• Over 94 percent of consumer restitution for illegal credit card practices amounting to $6.8 billion dollars; and
• Every single case addressing illegal practices in the “payday” and car title lending industry.

The study concludes that the Financial Choice Act of 2017 will, if enacted, seriously weaken the CFPB’s law enforcement program.

Trump CFPB Director Shortlist Said to Consist of Hensarling, Zywicki & Noreika

So says Politico, here. According to the report, the nominee could be announced in January.

"We must all fight to defend a key watchdog for financial fairness"

The Washington Post's personal finance columnist Michelle Singletary weighs in on the controversy over leadership of the Consumer Financial Protection Bureau, here.

Federal district court rules, at TRO stage, that Mulvaney (not English) is the Acting CFPB head

This article by C. Ryan Barber says that 

U.S. Justice Department lawyers convinced [U.S. district judge Timothy] Kelly that the Federal Vacancies Reform Act should control the outcome of the leadership dispute. That law gives the president wide authority to install Senate-confirmed acting heads at executive agencies. Kelly said the text of the vacancies law applies in English’s case. “On its face, the [Federal] Vacancies Reform Act does appear to apply to this situation,” Kelly said in court Tuesday. He said the text of the law “does not say that VRA would not be available in this situation.”

So, at least for the time being, we have a leader of the CFPB that described the agency as "a sad, sick joke."

The Washington Post has this on the decision.

When should a court unmask the identity of an anonymous blogger whose blogging constitutes copyright infringement?

That's the topic of this split decision today from the Sixth Circuit.

CFPB Judge Promises to Decide Case Quickly as DOJ Attorney Refuses to Pledge that English Won't Lose Job

The Wall Street Journal reports here. Excerpt:

Asked by the judge if he could provide assurance that the administration wouldn’t take any adverse action against Ms. English that could immediately affect the case, [Brett Shumate, deputy assistant attorney general for federal programs] replied, “Loss of a position is not irreparable harm.”

English v. Mulvaney & Trump: Some Reasons Why It Matters

by Jeff Sovern

A couple of people have suggested to me that it doesn't really matter who wins as between English and Mulvaney because Trump will still get to nominate a new director for a five-year term.  I think that's wrong for several reasons.

First, the obvious: the process of nomination and confirmation is not instantaneous, and so during the interval between those two events, the CFPB will continue to make decisions. Consumers will be better off if a consumer advocate makes them.

Second, as others have observed, the CFPB is supposed to be independent of the president. Mulvaney reports to the president in his role as head of OMB, and so the CFPB's independence is compromised.  Some have also pointed out that the CFPB director sits on other governmental panels which are also supposed to be independent of the president. Presidents can direct agencies within their control to pursue political goals at the expense of the public interest. At least theoretically (and I hope in practice), independent agencies are free to exercise judgment uninfluenced by political goals. To take one extreme example, they can penalize banks without concern that doing so will cost them political contributions. 

Third, the resolution of this dispute will affect the incentives the president faces in appointing a new director.  If English wins, Trump will presumably want to appoint a new director quickly to get one of his people at the CFPB.  If Mulvaney wins, that incentive disappears. In fact, Trump might prefer to delay appointing a new director because he will lose the direct control he can exercise over the Bureau once a new director is confirmed.   Put another way, one argument for ruling for English is that doing so will encourage the president to nominate a candidate  sooner rather than later so that the Bureau is run by someone approved by the Senate in accordance with the statutory scheme Congress established, rather than by an interim leader.

The president is entitled to name a new director as long as the Senate concurs in his choice.  Appointing Mulvaney gives the president control over the supposedly-independent CFPB for an extended period without any senatorial review.  That is not what Congress wanted when it enacted the Dodd-Frank Act. And that's a problem.

 

White House's Mulvaney tells CFPB staff to 'disregard' Leandra English

Lots of stories and legal analysis today about the dispute over whether the President can name an acting director of the Consumer Financial Protection Bureau or whether the deputy director, by statute, has become the acting director. And Reuter's reports that the President's pick, OMB Director Mick Mulvaney, has instructed staff to disregard any directions from deputy director Leandra English "in her presumed capacity as Acting Director." (Even if she is not acting director, no one disputes that she is the deputy director, with authority to issue various instructions.)

The extent of the coverage and the nature of the issue attest to the need for a prompt judicial resolution. 

English Sues Trump, Mulvaney Over CFPB Leadership

The complaint is here.  She is seeking an emergecy TRO. English is represented by CL&P co-coordinator Deepak Gupta.  Meanwhile, Reuters reports that the CFPB General Counsel's Office takes the position that the president can appoint Mulvaney.