Consumer Law & Policy Blog

Does Mulvaney Want to Protect the CFPB from Consumers?

by Jeff Sovern

More and more, the CFPB's acting director, Mick Mulvaney, has made clear that he is not interested in hearing from consumers or their advocates. As Allison reported earlier today, the CFPB has kicked off all the members of its advisory committees, which included industry folks as well as consumer advocates and professors. The Bureau used to hold frequent field hearings during which it arranged for industry officials, consumer advocates, and academics to speak, and members of the public were also invited to weigh in.  Not under Mr. Mulvaney.  As we reported in December, the Bureau cancelled a survey to learn more about how consumers understand debt collection notices.  Mr. Mulvaney has also raised the possibility of concealing complaints in the complaint database from the public, which would deprive consumers of a way to express themselves publicly as well as reducing the incentive to complain to the Bureau, because financial institutions would have less incentive to heed complaints to the Bureau (after all, it's not as if the Bureau is bringing cases based on those complaints any more). Perhaps all this is because consumers haven't given Mr. Mulvaney campaign contributions, and he prefers to hear from those who have.  It is hard to protect consumers if you cut yourself off from them, but then, Mr. Mulvaney doesn't seem inclined to protect consumers.  Rather, he seems to want to be protected from them.

To make matters even worse, Mr. Mulvaney's spokesperson has taken an unfortunate shot at the people who volunteered to serve on the Consumer Advisory Board without pay to advise the Bureau.  According to Kate Berry in the American Banker:

"The outspoken members of the Consumer Advisory Board seem more concerned about protecting their taxpayer funded junkets to Washington, DC and being wined and dined by the Bureau than protecting consumers," [CFPB spokesman John] Czwartacki said in an emailed statement.

I wonder if anyone who see that comment believes it or if Mr. Czwartacki is just damaging his own credibility.

It's a shame that the media isn't reporting more about what's going on at the Bureau, because consumers have lost a key protector.

UPDATE: The CFPB held a town hall meeting on fighting elder financial exploitation in Topeka, Kan on June 8. It's not described as a field hearing, but perhaps it offers some of the same features.  I will listen to the recording with interest when it becomes available.

 

Mulvaney dismisses members of CFPB advisory board

Consumer Financial Protection Bureau's Mick Mulvaney has dismissed the members of the agency’s Consumer Advisory Board. The CFPB's Policy Associate Director for External Affairs informed board members of the decision on a conference call Wednesday. The members were told that their terms were terminated and they were not permitted to reapply.

Politico has the story.

Fitbit Lawyer Admits Admits No Rational Consumer Would Arbitrate $162 Claim

by Jeff Sovern

So Allison Frankel reports for Reuters in a story headlined Fitbit lawyers reveal ‘ugly truth’ about arbitration, judge threatens contempt. Here are the first three paragraphs:

At a hearing Thursday in San Francisco federal court, a lawyer for the fitness tracking company Fitbit told U.S. District Judge James Donato that no rational customer would arbitrate a $162 claim against the company. The filing fee for a proceeding before the American Arbitration Association, said William Stern of Morrison & Foerster, is $750 - and that’s just to get the case started. It simply doesn’t make sense, Stern said no fewer than six times at Thursday’s hearing, to arbitrate a $162 claim.

Fitbit’s terms of service require customers to arbitrate their claims.

Quite simply, this is a Catch-22 for Fitbit customers. Fitbit imposes mandatory arbitration because it doesn’t want people who buy its fitness trackers to band together in a class action that would make their small claims economically viable. But Fitbit knows consumers, for the most part, won’t throw good money after bad to arbitrate their relatively small claims – and the company doesn’t want to lay out its money for small-dollar arbitration either.

This isn't the first time an industry lawyer has admitted that arbitration claims don't make sense or suppress claims.  See here  and here for other examples.

(HT: Gregory Gauthier)

"CFPB to Resume Private Consumer Data Collection"

The Wall Street Journal reports that Mick Mulvaney at the Consumer Financial Protection Bureau will lift the freeze on the CFPB’s collection of private consumer data, which helps its examiners oversee financial institutions.

The full article is here.

CFPB asks court to stay its payday rule

In April, payday lenders sued the Consumer Financial Protection Bureau over the payday lending regulation -- a rule that provides borrowers with various protections to avoid the cycle of debt too-often associated with payday lending. Yesterday, in a joint filing, the CFPB and the payday lenders together asked the court to stay the litigation while the CFPB "reconsiders" the rule.

At the same time, they also asked the court to stay the compliance dates of the rule until the litigation ends.

To sum up, the CFPB and the payday group want the court to stay the litigation indefinitely and then stay the rule until the litigation ends -- that is, indefinitely.

Without discussing the "equities," the short motion says that the "balance of the equities" favors an indefinite stay. It is a lazy motion that doesn't pretend to address the standard for the requested stay of the rule, telling the court to ask if it wants an explanation.

Another reminder that the Consumer Financial Protection Bureau is no longer a consumer protection bureau.

The short motion is here.