Consumer Law & Policy Blog

NY AG Brings Loan Sharking Case Against Lucchese Organized Crime Family for Charging 200% Interest While CFPB Dismisses Case Against Payday Lender Charging More Than Four Times as Much

by Jeff Sovern

Apparently the Lucchese Organized Crime Family charges less than a quarter of what payday lenders charge. Last week, New York State Attorney General Eric T. Schneiderman announced indictments of ten members of the group in the largest loansharking investigation in the office's history. Schneiderman's press release reports:

[U]surious interest payouts exceed[ed] a million dollars just during the approximately one-year investigation.

* * * 

Victims were allegedly charged exorbitant weekly loan rates averaging over 200 percent per year, effectively creating a high-cost debt trap for all individuals taking out such loans.

Now compare that to the CFPB's description of the payday lending case it recently voluntarily moved to dismiss under Mr. Mulvaney's leadership

* * * Golden Valley Lending and Silver Cloud Financial have offered online loans of between $300 and $1,200 with annual interest rates ranging from 440 percent up to 950 percent.  * * *

* * * 

The lenders’ websites did not disclose the annual percentage rates that apply to the loans. When contacted by prospective borrowers, the lenders’ representatives also did not tell consumers the annual percentage rate that would apply to the loans.

Which sounds worse? I've obviously left out a lot of the press releases out in the interest of brevity, but go read the full text of both and see which sounds worse to you.

As Trump and Pruitt prepare to roll back the Obama era fuel-economy standards, will EPA go to war with the Nation of California (which wants to stick with the more stringent standards)?

Many of our readers no doubt have read that Scott Pruitt (EPA head and climate change denier) is planning to scrap the Obama Administration's fuel-economy targets aimed at making cars more fuel efficient (and, in turn, having some positive effect on climate change). This article by Evan Halper explains that California plans to stick with the higher standards -- see chart below -- which could set off a legal and political war between California and the feds. As Halper notes, "California's rules apply to more than a third of cars sold across the country, and automakers are loath to create multiple production lines to comply with conflicting rules." In other words, California may have the power to effectively dictate the rules no matter what Pruitt does.

Continued Issues with Nondisparagement Clauses in Form Consumer Contracts

by Paul Alan Levy

Despite the passage of the Consumer Review Fairness Act in December 2016, businesses continue to use non-disclosure and non-disparagement clauses in form contracts to suppress criticism of their products and services. This blog post summarizes several situations in which we have been involved recently.

Premier Pools and Spas in Dallas

The most blatant and current of the situations involves the Dallas, Texas area franchise of a national pool construction business, Premier Pools and Spas. When Kasey and Michael Corcoran signed a contract for construction of a pool in their home, the form contract that they were given to sign included the following language buried in the tiny print of an arbitration clause (see paragraph 12):

“Therefore, buyers posting any comment on the internet that PPAS deems as disparaging before completing the arbitration process hereby agrees to pay PPAS a $3500.00 fee and remove the post with 48 hours of posting. Failure to remove any posting with PPAS with 48 hours and to pay this fee will result in PPAS notifying all three credit bureaus. . ..”

Recent activity on payday loans in the states

From Kenosha News (WI), "Group rallies against high-interest lending practices in Kenosha, state" (March 27), here.

From Akron Beacon Journal / Ohio.com, "Editorial: Real regulation for payday lenders" (March 26), here.

From Wall Street Journal, "Florida Gives Payday Lenders a Boost" (March 19), here.

From Nonprofit Quarterly, "Florida Senate Backs Changes in Payday Loans that Contribute to Debt Traps" (March 8), here.

From Montgomery Advertiser, "Alabama Senate approves limits on payday loan terms" (March 8), here.

Fred Williams Report on Complaints About Credit Cards to CFPB Database

The report, at CreditCards.com,  is titled "Store-card issuers top list of complaints with the CFPB" and the subheading is" Purchase issues, unexpected fees or interest are most common card-related gripes." The report lists the most-complained-about issuers per $100M in card balances and also reports on which issuers give the most refunds. Here's an excerpt:

It makes sense that store cards, used exclusively at a single merchant, would be more sensitive to customer complaints than general purpose cards, said Kevin Morrison, senior analyst of retail banking and payments at Aite Group.

“If they’re processing the store credit card, now you have a merchant involved that’s very sensitive about their relationship with the customer,” he said. “If there’s a dispute, the card issuing bank is much more apt to waive the fee.”

On the other hand, the largest card issuers are more likely to depend on automated processes, he said, and have less time for one-on-one hand holding.

 

Consumer Law Professor Dalié Jiménez Joining UCI Faculty

Here is the tweet. It's always great to see a consumer law professor at a school ranked in the top twenty-five.  Congratulations to UCI on its good judgment and to Dalié on the move.

Column on how Trump is rolling back state-specific consumer protections

Louisville consumer lawyer Ben Carter just wrote this opinion piece for the Louisville Courier-Journal on the Trump Administration’s efforts to roll back state-specific consumer protections on payday lending and student loan debt servicing.

CFPB head Mick Mulvaney reportedly dropping payday lending matters

This article says that "[t]he top cop for U.S. consumer finance has decided not to sue a payday loan collector and is weighing whether to drop cases against three payday lenders, said five people with direct knowledge of the matter."

"Top cop" for whom?

New study on forced workplace arbitration

The National Employment Lawyers Association Institute has just released this report about forced arbitration in the workplace. Here's how the Institute describes the report:

Authored by Loyola University New Orleans College of Law Prof. Imre S. Szalai, this groundbreaking report finds that 80 percent of Fortune 100 companies use arbitration in their employment documents, nearly half of which contain class and collective action bans. Among those companies that use arbitration to resolve employment disputes, at least half force arbitration on employees as a condition of employment. 

 

By identifying which of America’s most powerful companies have imposed arbitration on employees, this report makes a unique and essential contribution to the public’s understanding of the magnitude of the threat arbitration poses to America’s workers. Please feel free to share this important work with others, using the hashtag #FairNotForced on social media. Together, we will advance equality and justice in the American workplace.

When the airlines play by the rules -- and don't drag you off an overbooked plane -- consumers may have some bargaining power

This article by Hugo Martin explains:

The smartphone video that went viral last year showing a United Airlines passenger being dragged out of an overbooked flight prompted several large airlines to vow to end or dramatically reduce the number of passengers denied a seat. The nation's airlines have made good on that promise. *** or its part, United demonstrated last week how far it will go to avoid another embarrassing incident involving an oversold flight. United Airlines confirmed that it offered a passenger named Allison Preiss a $10,000 voucher toward future flights to give up her seat on an overbooked flight Thursday from Washington Dulles International Airport to Austin-Bergstrom International Airport.