Consumer Law & Policy Blog

CFPB Has No Update on Enforcement Freeze After Not Announcing Enforcement Action in More Than 2 Months

by Jeff Sovern

In response to my inquiry, a CFPB representative, Brenda Muniz, informed me today that "There are no updates with respect to the freeze on enforcement actions or the issuance of CIDs," and that the CFPB has not announced an enforcement action since its November 21 announcement about Citibank. Though the Bureau's press releases say that it is “consistently enforcing federal consumer financial law," and Mr. Mulvaney released a statement yesterday, which Allison linked to, in which he said the Bureau would enforce consumer laws on his watch, it's hard to find evidence of it, unless he means that the Bureau will continue to litigate cases Mulvaney's predecessor commenced, though even that is not always happening.  Meanwhile, today the Bureau issued the promised Request for Information Regarding Bureau Civil Investigative Demands and Associated Processes.

Handy Practical Guide to Copyright and Other Issues

by Paul Alan Levy

Consumer groups, bloggers and others would do well to look through the Berkman Center's new "Cyberlaw Guide to Protest Art," a handy guide to assessing copyright and other IP risks associated with using content that might provoke threats of infringement litigation.

Trump Nominates FTC Acting Chair Maureen Ohlhausen for Federal Judgeship

Law360 has the story here. The FTC has only one other commissioner at the moment, though the president has nominated two other commissioners, Joseph Simons and Rohit Chopra.

Mulvaney's memo to CFPB employees

Mulvaney sent a memo to employees at the Consumer Financial protection Bureau today. You can read it here.

Your Phone May Spy and Report on Your TV Viewing

by Jeff Sovern

Back in December, the Times had an article headlined That Game on Your Phone May Be Tracking What You’re Watching on TV, that reported that hundreds--even thousands--of apps, some geared towards children, use the phone microphone to identify what shows people are watching, which can in turn be used to target ads to them more precisely. The article reported about the company that supplies the software for doing so, Alphonso:

Alphonso said that its software, which does not record human speech, is clearly explained in app descriptions and privacy policies and that the company cannot gain access to users’ microphones and locations unless they agree.

“The consumer is opting in knowingly and can opt out any time,” Ashish Chordia, Alphonso’s chief executive, said, adding that the company’s disclosures comply with Federal Trade Commission guidelines. The company also provides opt-out instructions on its website.

But we know consumers rarely read such things.  The story includes a picture of an app with a statement on it reading that "The app uses audio to detect TV ads and content and shows appropriate mobile ads." That at least is more likely to be read.  But will consumers understand what it means? What about children itching to play a game on their phones? Will consumers know that "TV ads and content" means the app is spying on what is on a TV in their vicinity, as opposed to, say, that the app will know when an ad also shown on TV runs on their phone?  Personally, I'm skeptical. Creepy.

CFPB drops investigation into abusve marketing and lending practices

The Consumer Financial Protection Bureau has ended its investigation into the marketing and lending practices of World Acceptance Corporation, a self-described "small-loan consumer finance" company. World Acceptance generates the bulk of its revenue through refinancings. As ProPublica has explained, here, the company makes installment loans with "sky-high rates" and generates revenue by charging interest up front and then encouraging borrowers to renew repeatedly.

The CFPB began the investigation in 2015. According to Business Wire, the agency has now stated that it will not be taking enforcement action.

Center for Auto Safety asks Ford to recall 1.3 million Explorers for carbon monoxide leaks

Today, in a letter to Ford Motor Company CEO Jim Hackett, the Center for Auto Safety renewed its request for Ford to conduct a full recall of 1.3 million Model Year 2011-2017 Explorers because of suspected Carbon Monoxide leaks. This follows the Center’s call for action in October 2017, after Ford failed to take seriously the thousands of consumer complaints which had been filed with NHTSA, Ford, and the Center for Auto Safety.

In the eighteen months since NHTSA opened its investigation in July 2016, complaints to NHTSA have increased 900%. NHTSA has received at least 1,381 complaints from Ford drivers and passengers experiencing Carbon Monoxide exposure in the passenger cabins of Explorers. These complaints do not include the over 2,000 complaints Ford previously disclosed.

The Center's full press release is here. The Center's letter is here.

Mulvaney Claims He Is Not Trying to Destroy the CFPB (But What Else Would He Say?)

by Jeff Sovern

According to Evan Weinberger, writing in Law360:

Office of Management and Budget Director Mick Mulvaney, who is leading the Consumer Financial Protection Bureau on a temporary basis despite a court challenge from the bureau's deputy director, insisted Friday that he is not trying to destroy the federal watchdog from within.

Mulvaney, who has been serving as the CFPB’s acting director since Nov. 24, told reporters at a White House briefing ahead of a potential government shutdown that he fully intends to have the bureau continue policing financial markets for fraud and abuse.

It is hard to reconcile Mulvaney's claim that the Bureau is a sad, sick joke, with the idea that he fully intends to have the Bureau police markets.  It makes me wonder how he defines fraud and abuse.  I wish Mr. Mulvaney would clarify his sad sick joke comment. Does he still feel that way about the Bureau? If so, why? If not, what has changed in his view?

Loonin/Morgan Article: We Need to Know More to Solve the Federal Student Aid Problem

Deanne Loonin of Harvard University - Hale and Dorr Legal Services Center and Julie Margetta Morgan of the Bill & Melinda Gates Foundation have written Federal Student Aid: Can We Solve a Problem We Do Not Understand?, forthcoming in the Utah Law Review. Here is the abstract:

Americans currently owe over $1.3 trillion in student loans, more than two and a half times what they owed a decade ago. This explosion in student loan debt comes at a time when a college degree is widely considered a necessity for economic mobility. As the costs of higher education continue to grow, most individuals seeking to get ahead and improve their lives through education rely on loans to finance their degrees.

The government is by far the largest student loan bank, servicer and collector in the United States. Yet by almost any measure used to justify the government’s investment in student loans---ensuring that all students have access to college, closing our country’s wealth and opportunity gap, educating individuals to compete in a global economy---the federal student loan program is failing. 

Policymakers and advocates across political spectrums have proposed a long list of reforms to address these failures. This article argues that the rush to solutions is premature because experts are writing policy prescriptions without fully diagnosing the problem. Further, we argue that there is insufficient information to make this diagnosis. We focus on the lack of information about the way the program is governed and administered by the federal government and its contractors, asserting that greater transparency into the program’s administration is a necessary first step in understanding the failures of the federal student loan program. 

This article describes the gaps in existing information on student loans. We then focus on how the Department of Education’s policies and practices affect program success. In the final sections, we argue that improved public access to information about the administration of the student loan program is essential to enhance both policymaking and outcomes for student loan borrowers, describing some available options for improving access to information and how to use these tools more effectively.

 

House Financial Services Committee Markup of Bill to Exclude Lawyers Litigating Debt Collection Cases from FDCPA Deferred Until March

by Jeff Sovern

Earlier this week we linked to an op-ed by Mary Spector (SMU), Genevieve Hebert Fajardo (St. Mary’s) and Neil L. Sobol (Texas A&M) criticizing a debt collection bill pending in the House, HR 4550, which would exclude from the FDCPA's coverage attorneys to the extent they are engaging in litigation. Though the bill was originally scheduled for markup this week by the House Financial Services Committee, AccountsRecovery.net is reporting that the markup of that bill has been postponed until early March.