Consumer Law & Policy Blog

Phishing Emails Now Purporting to Come From Law School Deans!

by Jeff Sovern

Phishing emails purporting to come for financial institutions and others have long been an unfortunate fact of life for consumers (for a reports of phishing emails supposed to be from the Office of the Comptroller of the Currency, go here, and the concept of phishing has even shown up in the title of a book by two Nobel Prize winners). But I have now heard of such emails claiming to be sent by a law school dean.  I haven't seen the actual emails, so I'm not sure how the scammer intended to benefit from impersonating a dean but apparently they exist.

Will ERISA class actions over illegal fees and retirement plan mismanagement be killed off by class-action arbitration bans?

That's the topic of this piece by Jacklyn Willie (possibly behind a pay wall) which discusses this Chamber of Commerce amicus brief filed in an important Ninth Circuit appeal. The suit was filed against the University of Southern California by its employees over the legality of fees charged through USC's employee retirement plan. Willie explains that

The central question in this lawsuit—whether arbitration clauses in employment agreements extend to ERISA claims—hasn't yet been addressed by the Ninth Circuit. In March, a federal judge in California blocked USC from sending the dispute into arbitration. The judge said the employees’ claims were brought on behalf of the retirement plan, and the plan itself never consented to arbitration. If the Ninth Circuit agrees with USC and the Chamber, it could become much harder for retirement plan participants to bring class actions challenging plan fees and other potential mismanagement.

 

Texas Anti-SLAPP Motion Cannot Be Evaded by Voluntary Dismissal

by Paul Alan Levy

Prestigious Pets, the Dallas-area pet-sitting company that faced a blizzard of public criticism after it invoked a non-disparagement clause as a basis for suing a husband and wife in small claims court after the wife posted over a mildly critical Yelp review of the company’s procedures and the resulting overfeeding a pet fish, has suffered another court reversal. The Dallas Court of Appeals has held that the defendants, Robert and Michelle Duchouquette, are entitled to consideration of their request for financial remedies for the baseless suit that was filed over their speech.  The new proceeding will consider both the attorney work in the original proceedings in small claims court, plus the subsequent appellate work stemming from those proceedings.

Demand Letters That Purport to Forbid Posting

by Paul Alan Levy

After the late John Dozier was humiliated about ten years ago after it came to light that his office was routinely including a tag line in its demand letters threatening to sue for copyright infringement if the demand letter was republished, I thought it had become well-established that using those lines was such a sure route to public ridicule that such lines had become a thing of the past. 

Not so fast. Defamation demand letters sent in the last few days of October, one from Venable lawyer Geoffrey Garinther complaining that Tucker Carlson defamed Tony Podesta by associating him with Paul Manafort, and one from Venable lawyer William Briggs complaining that some obscure blog defamed Taylor Swift by associating her with the alt-right. The blog post about Swift  is convoluted and well-nigh incomprehensible – I imagine the Northern California ACLU’s publication of its response to the demand letter will likely bring far more attention to the blog post (and thus to the gist of the post as described by Briggs) than the review would ever have received otherwise. 

Student debt and military service

The Consumer Financial Protection Bureau today published these tips for service members with student debt.

Positive-value claims and class-action deterrence

It's often said that a class action makes sense as a tool for aggregating negative-value claims (claims that even if litigated successfully on an individual basis result in a loss to the plaintiff). In Deterrence and Aggregate Litigation, law prof Keith Hylton looks at positive-value claims and finds that optimal deterrence is served by class actions there too. Here's the abstract:

This paper examines the deterrence properties of aggregate litigation and class actions, with an emphasis on positive value claims. In the multiple victim scenario with positive value claims, in the absence of the class action device, the probability that an individual victim will bring suit falls toward zero with geometric decay as the number of victims increases. The reason is that the incentive to free ride increases with the number of victims. Deterrence does not collapse but is degraded. Undercompliance is observed, which worsens as the number of victims increases. Compliance is never socially optimal, and the shortfall from optimality increases with the number of victims. These results, which continue to hold even if victims anticipate being joined in a single forum, suggest a more nuanced and potentially more robust justification for the class action than has hitherto been provided. Implications for collusive settlements of class action litigation are discussed.

New book about the CFPB and its future

Larry Kirsch and Gregory Squires have written Meltdown: The Financial Crisis, Consumer Protection, and the Road Forward. Here's how  the authors describe the book's 5 key features:

• Presents the first comprehensive examination of the CFPB that identifies its successes during its first five years of operation and addresses the challenges the bureau now faces
• Exposes the alarming possibility that as the economy recovers, the Consumer Financial Protection Bureau's efforts to protect consumers could be derailed by political and industry pressure
• Offers provisional assessment of the effectiveness of the CFPB and consumer protection regulation
• Gives readers unique access to insightful perspectives via on-the-record interviews with a cross-section of stakeholders, ranging from Richard Cordray (director of the CFPB) to public policy leaders, congressional staffers, advocates, scholars, and members of the press
• Documents the historical and analytic narrative with more than 40 pages of end notes that will assist scholars, students, and practitioners

Does Credit Card Regulation Increase the Availability of Credit Cards, Despite Industry Claims?

by Jeff Sovern

The banking industry opposed the Credit Card Act of 2009  on the ground that it would reduce the availability of credit. We heard the same objection to 2010's Dodd-Frank Act.  So you might think that it would be hard to get a credit card or to use one to borrow these days.  Well, no. Here is an excerpt from a NY Times piece:

Outstanding credit card debt — the total balances that customers roll from month to month — hit a record $1 trillion this year, according to the Federal Reserve. The number of Americans with at least one credit card has reached 171 million, the highest level in more than a decade, according to TransUnion, a credit-reporting company.

It's impossible to know what credit card lending would be in the absence of the two statutes.  But we can certainly say on the basis of this report that the statutes did not keep more consumers from having credit cards than ever before, or credit card debt from being higher than ever. Does that sound like credit cards are unavailable? Wouldn't it be nice if the industry, which calls for accountability for the CFPB, was held accountable for its own erroneous predictions (though unfortunately, by rescinding the CFPB's arbitration rule, our lawmakers seem more interested in insulating the industry from accountability)? Not that greater availability is necessarily a good thing for all consumers. The Times story, by Jessica Silver-Greenberg and Stacy Cowley, is headlined A Boom in Credit Cards: Great News for Banks, Less So Consumers. 

In Double Whammy for Students, Tax Proposal Would Eliminate Deductibility of Student Loan Interest Payments and Tax Some School Endowments

by Jeff Sovern

So reports MarketWatch. If the bill is enacted, students will effectively have to pay more for student loans and some schools will have a harder time helping with scholarships because their endowments will be smaller than they otherwise would be.

Anticonsumer Advocates Try to Talk Trump into Firing CFPB Director Cordray

by Jeff Sovern

According to a CNBC story, Trump wants to sack consumer protection chief but is afraid of turning him into hero for the left, during the signing of the resolution to rescind the CFPB arbitration rule, a session that, as far as I know, was attended only by representatives of the financial services industry, members of majority party in Congress, and members of the Trump administration, CFPB opponents tried to talk Trump into firing CFPB director Cordray. Trump polled at least some attendees at the meeting, who were split on firing Cordray. As the headline implies, one argument voiced against firing Cordray was the fear that he would become a martyr.  The article did not indicate whether any other arguments against the firing were advanced.  Here is an excerpt:

Hensarling and Rep. Sean Duffy were said to push doggedly for Cordray to be fired, suggesting they could write letters to expedite the process. But a White House official notes the views were not unanimous, with Rep. Patrick McHenry disagreeing with his Capitol Hill colleagues.

It is interesting that even some of Cordray's critics oppose his firing.  I wish the article had reported what, if anything, the bankers had said.