Consumer Law & Policy Blog

Two stories on net neutrality

The Washington Post today had two stories on the Federal Communications Commission's repeal of the net neutrality rule that are worth reading:

First, in "The net neutrality lawsuits are coming. Here’s what they’re likely to say," technology correspondent Brian Fung anticipates the arguments of state attorneys general and consumer groups expected to challenge the repeal of the rule. The article is here.

Second, in "Days after the FCC repealed its net neutrality rules, the GOP has a bill to replace them," the Post reports on a new bill that would replace some — but not all — of the rule:

Rep. Marsha Blackburn (Tenn.) on Tuesday unveiled what she is calling the Open Internet Preservation Act. The bill restores two of the most important provisions of the FCC's net neutrality rules: a ban on the blocking of websites, as well as a ban on the slowing of websites. It also includes the same public disclosure requirements Internet providers must abide by under the FCC's decision from last week.

The bill also directs the FCC to enforce the legislation by setting up an inbox for net neutrality complaints and adjudicating them. But

the bill omits a third plank of the FCC's 2015 net neutrality rules: The ban on “paid prioritization,” or the ability of Internet providers to speed up certain websites in exchange for money.

The full article is here.

The tax deform monstrosity promises more than full employment for tax advisers, accountants, and lawyers

Tax reform was going to be tax simplification. Tax returns on post cards. Right. Read this piece by John Cassidy explaining that besides its "unfairness" and "corrupt nature," [w]hat isn’t yet fully appreciated" about the Trump tax legislation

is how porous and potentially unstable the rest of the tax code will be after the bill is passed. With a corporate rate of just twenty per cent, and a big new break for proprietors of unincorporated businesses and certain types of partnerships, the new code will contain enormous incentives for tax-driven restructurings, creative accounting, and outright fraud. Every tax adviser and scammer in the country will be looking for ways to reclassify regular salary income as favored types of business income. *** Perhaps that is what Republicans want to happen. Undoubtedly, there are some in the Party who would like to see the tax base decimated, the I.R.S. crippled, and the federal government forced to slash spending on domestic programs, particularly entitlement programs. But, for anybody who believes in a properly functioning government, a rational, clearly defined tax system is essential. The Republican reform doesn’t meet that standard. 

Economists across the spectrum generally are skeptical of the claim that this legislation will significantly aid the economy, and they flat-out reject the notion that the bill will pay for itself (rather than create massive deficits). But the bill does promise something: more than full employment for tax advisers, accountants, and lawyers.

Does Cancellation of the Debt Collection Notice Survey Mean Lawmaking in the Dark Has Come to the CFPB?

by Jeff Sovern

Advocates for some positions sometimes block the federal government from researching or supporting research on issues. For example, supporters of gun rights have long had the votes to prevent the government from obtaining data about gun safety.  See, e.g., Newsweek's report titled THE GOVERNMENT WON'T FUND RESEARCH ON GUN VIOLENCE BECAUSE OF NRA LOBBYING. What appears to be a similar ethos made headlines recently when it was reported that the Center for Disease Control and Prevention had barred the use of words like ''evidence-based" and "science-based" in budget documents.  Now that spirit may have come to the CFPB. Earlier in the year, the CFPB had sought to conduct a survey of consumers on debt collection notices. The Dodd-Frank Act gave the CFPB the power to issue regulations interpreting and implementing the Fair Debt Collection Practices Act, something no other agency has been able to do, and as the statute is four decades old, has rarely been updated, and predates modern communications methods such as cell phones, emails, texts, or even fax machines, while referring to telegrams, it is badly in need of corresponding regulations. One area which particularly needs work is debt collection notices, and the CFPB survey would surely have helped determine how to make those notices effective. A survey I co-authored found serious problems with a widely-used debt collection notice, and the Bureau could have tested other notices to see how to make them more useful to consumers. But the new leadership at the CFPB has withdrawn the Bureau's proposed survey. I very much hope that this is merely a pause in the Bureau's effort to learn about debt collection notices, and that the Bureau later conducts the survey. That may in fact be what happens because the withdrawal notice reports that the "Bureau leadership would like to reconsider the information collection in connection with its review of the ongoing related rulemaking." But I fear that this is another example of how evidence-based lawmaking is no longer in vogue and that the pause will never end.

Microsoft will no longer demand mandatory arbitration of sexual harassment (and other sex discrimination) claims

Microsoft says it is "eliminating a requirement that employees pursue sexual harassment and gender bias claims through arbitration instead of in court, after revelations this year of improper behavior across technology, entertainment and other industries." The company is also "supporting a proposed federal law that would widely ban [forced arbitration] agreements."

That's fantastic news; it truly is. Other businesses should follow Mircosoft's lead.

But what about forced arbitration of racial harassment (and other race discrimination) claims? What about wage & hour claims? What about consumer-law claims by Microsoft's customers? 

The legislation that Microsoft supports is sponsored by Senators Lindsay Graham and Kirsten Gillibrand. In trumpeting the legislation, Graham said “[t]o expect change without pushing for change is unrealistic. This legislation takes off the table the ability of employers to mandate arbitration before claims even arise. Mandatory arbitration employment contracts put the employee at a severe disadvantage. I do not oppose arbitration -- if the parties willingly consent to the process." (emphasis mine)

Couldn't agree more with Senator Graham. Arbitration is often okay if it's agreed to after the dispute arises. It's very much not okay when it's forced on employees and consumers pre-dispute.

Senator Graham's press release says:

Forced arbitration clauses prevent survivors of sexual harassment from discussing the nature or basis of their complaint. If an employee’s contract or employee handbook includes a forced arbitration clause, the employee is likely to have signed away his or her right to a jury trial whether or not they are aware of the clause. Employees are far more likely to win cases that go to trial than cases that go through the arbitration process. 

That puts it just right. The secrecy of the arbitration process is particularly pernicious as applied to sexual harassment claims. But each of the problems Graham outlines applies to forced arbitration generally.

(To Graham's great credit, he voted against the congressional repeal of the CFPB's arbitration rule.) 

Bipartisan group in Congress seeks override of CFPB's new payday lending rule

In early October of this year, the Consumer Financial Protection Bureau finalized its payday loan rule. In a press release, the agency described the rule's benefits this way:

The CFPB rule aims to stop debt traps by putting in place strong ability-to-repay protections. These protections apply to loans that require consumers to repay all or most of the debt at once. Under the new rule, lenders must conduct a “full-payment test” to determine upfront that borrowers can afford to repay their loans without re-borrowing. For certain short-term loans, lenders can skip the full-payment test if they offer a “principal-payoff option” that allows borrowers to pay off the debt more gradually. The rule requires lenders to use credit reporting systems registered by the Bureau to report and obtain information on certain loans covered by the proposal. The rule allows less risky loan options, including certain loans typically offered by community banks and credit unions, to forgo the full-payment test. The new rule also includes a “debit attempt cutoff” for any short-term loan, balloon-payment loan, or longer-term loan with an annual percentage rate higher than 36 percent that includes authorization for the lender to access the borrower’s checking or prepaid account. [The specific requirements of the rule are set out after the jump.]

Yesterday, an American Banker opinion piece entitled CFPB's rule will hurt consumers defended the payday-loan industry and called for Congress to overrule the CFPB rule. The piece's author, Drew Breakspear, is the commissioner of Florida's Office of Financial Regulation. Breakspear says the congressional override has bipartisan support. The sponsorship of the override is, in fact, bipartisan.

Trump-friendly provision slipped into tax bill at the last minute

Is this coincidence or self-dealing by our despicable president? It's actually hard to know. David Sirota and Josh Keefe report that 

Republican congressional leaders and real estate moguls could be personally enriched by a  real-estate-related provision GOP lawmakers slipped into the final tax bill released Friday evening, according to experts interviewed by International Business Times. The legislative language was not part of previous versions of the bill and was added despite ongoing conflict-of-interest questions about the intertwining real estate interests and governmental responsibilities of President Donald Trump — the bill’s chief proponent.

Read the whole story here.

Beyranevand Article: Regulating Inherently Subjective Food Labeling Claims

Laurie J. Beyranevand of Vermont has written Regulating Inherently Subjective Food Labeling Claims, 37 Environmental Law 543 (2017).  Here is the abstract:

For many consumers, the modern food label serves as the sole source of information regarding any individual food product. While it may be considered informative in some respects, it is often enigmatic in others. The present debate regarding the creation of a federal regulation to define use of the term “healthy” exemplifies the difficulties associated with seemingly subjective food labeling claims.The law requires manufacturers to include certain facts on food labels. However, they are permitted to include additional voluntary statements related to the healthfulness of the food product, the presence or absence of certain ingredients, and information related to production and growing methods, among other things. These claims have the potential to cause consumers a great deal of confusion, particularly with regard to their veracity. Many scholars have analyzed First Amendment limits on the Food and Drug Administration’s (FDA) ability to restrict specific types of claims, yet few have addressed the issue of whether the agency can and should restrict claims unable to be supported by significant scientific agreement due to the inherent subjectivity of the claim. This Essay proposes FDA adopt such an approach as a means of effectuating the Federal Food, Drug, and Cosmetic Act’s purpose of protecting consumers from false or misleading food product labels. As an alternative, if FDA is unwilling to restrict those claims altogether, this Essay suggests the agency could require curative disclaimers on labels, as they do for qualified health claims, that are not supported by significant scientific agreement.

One-Third of Americans Have Debt in Collection, Including 45% of Nonwhite Consumers

According to a report by the Urban Institute.  The report breaks down the data by county and other demographic data.  AccountsRecovery.Net has a story here. Nearly half of consumers in Louisiana have a debt in collection.

Tips on buying gift cards this holiday season

Public Citizen today put out a short statement about gift cards and forced arbitration provisions, here.

What to do about the Trump administration's decision to rescind Obama-era proposal requiring disclosure of airline bag fees

Allison recently posted about the Trump administration's decision to rescind a Department of Transportation proposal requiring airlines to disclose baggage fees at the start of a ticket purchase. Two things that consumers can do. First, Kayak has what looks like a comprehensive chart of all fees -- not just bag fees -- for all airlines. Second, complain to DOT about the decision to pull the rule.