Consumer Law & Policy Blog

Is Yelp Only for Losers?

by Paul Alan Levy

An article in the Washington City Paper discusses a new feature on Yelp’s web site, which captures health department inspection records and boils them down to a score (in most jurisdictions, the scale runs from zero and 100). Some restaurateurs who are unhappy about having received low health scores sounded off to the reporter about the alleged unfairness of the ratings; the local restaurant association is quoted as warning that Yelp is going to harm its "goodwill within the restaurant community."

The article suggests that the health-score data on the Yelp may be significantly out of date, in that the scores from some of the restaurants are apparently based on health department inspections that are themselves significantly out of date. The DC Department of Health admitted to City Paper reporter Laura Hayes that the last inspection of one restaurant, Simply Banh Mi, had been in December, 2016 even though the Health Department claims that most restaurants are supposed to be inspected at least twice a year. Another place, Il Canale, apparently went from December 2016 to June 2018 between inspections.

The article indicates that from July 25 to July 31, the Health Scores page for Simply Banh Mi had jumped six points from the 59 points that appeared earlier in the reporter's work on the article. Similarly, when I visited the Il Canale health scores page on August 6, five days after the article’s August 1 publication date, its score had gone from 66 to 72. HD Scores, the company whose data Yelp uses to populate this new feature, did not respond to my inquiry about whether it had deliberately increased the scores in response to criticism.

The California Consumer Privacy Act

Law prof Eric Goldman has written An Introduction to the California Consumer Privacy Act. Here's the abstract:

After a mere week of deliberations, the California legislature passed the Consumer Privacy Act (CPA), a sweeping, lengthy (10,000 words!), insanely complicated, and poorly drafted privacy regulation that will govern the world’s fifth largest economy. This short primer, excerpted from my Internet Law casebook, provides a relatively short overview of the law and a few of its many problems.

Goldman's piece reviews the Act's key provisions. The law was enacted on June 28 of this year and goes into effect on January 1, 2020. To get more information, go to this website dedicated to the new law. The text of the law is here.

“‘Too Little Too Late’: Bankruptcy Booms Among Older Americans”

Yesterday, the New York Times ran a distressing story by personal finance reporter Tara Siegel Bernard about the increasing rate of people 65 and older filing for bankruptcy protection. The story relies on a study that was recently released by professors Deborah Thorne of the University of Idaho, Pamela Foohey of the Indiana University Maurer School of Law, Robert Lawless of the University of Illinois College of Law, and Katherine Porter of the University of California – Irvine School of Law. Professor Foohey has a short write-up of the story and the study on the Credit Slips blog.

According to the article, the study suggests that the surge in bankruptcy filings is being driven by “a three-decade shift of financial risk from government and employers to individuals, who are bearing an ever-greater responsibility for their own financial well-being as the social safety shrinks.” Specifically, the shift is occurring in the form of “longer waits for full Social Security benefits, the replacement of employer-provided pensions with 401(k) savings plans and more out-of-pocket spending on health care.”

The article discusses some of the common factors that force older Americans into bankruptcy. For example, the article notes that, in 2016, “the bottom 25 percent of households had saved at most $3,260.” Obviously, this doesn’t provide much of a cushion in the event of an unexpected financial event, like a medical emergency. Compounding the problem is the fact that, as the article notes, gaps in Medicare are forcing individuals to pay out-of-pocket for a greater share of their medical expenses.

Also problematic is the fact that many Americans are heading into retirement with more personal debt. For example, more than 13 percent of the lowest-income households “face debt payments that equal more than 40 percent of their income.” Older folks are also getting into trouble because of debt that they incurred to help a family member, such as co-signing student loans for their children. The rising cost of higher education and the explosion of student loan debt are well-documented problems.

Overall, not a pretty picture. But it’s important that scholars and the media continue to pay attention to this growing problem and, ultimately, that policymakers do something about it.

Article on limitations periods on credit card collection lawsuits

Jon Sheldon at the National Consumer Law Center discusses "Shortening the Limitations Period on Credit Card Collection Lawsuits":

With the growth of the debt buying industry, the statute of limitations has become a particularly important defense in credit card collection lawsuits. Not only do debt buyers purchase credit card debt six months or more after the consumer stops paying, but the consumer’s debt may then be sold from one debt buyer to another to yet another. Years may elapse from default to when the last debt buyer in the chain of ownership purchases the account, and then that debt buyer may take additional time after purchasing the debt to actually filing suit.

Computing when the statute of limitations on a credit card collection lawsuit has expired is a surprisingly complicated matter, offering consumer defendants a number of opportunities to challenge the collector’s calculation of the time period. This article examines recent and not-so-recent case law considering:

    • Which of a state’s statute of limitations applies—one for written contracts or one for non-written contracts;

    • Which state’s statute of limitations applies—the forum state, the state listed in the contractual choice of law, or the card issuer’s home state;

    • When does the limitations period begin—from when the consumer stopped making payments or when the card issuer later claims it has demanded full payment;

    • Under what circumstances has the running of the limitations period tolled (i.e., stopped counting for a time) or revived (i.e., started counting all over again).

The full article is here.

Trump Administration targets student-loan protections

The Regulatory Review has a short piece on Betsy Devos's effort to roll back protections for student loan borrowers put in place under the Obama Administration, focusing on the borrower-defense rule. The post is here.

Data privacy and security of peer-to-peer payment apps

Mobile peer-to-peer payment services used on smartphones and tablets make it easy to transfer money between friends. Consumer Reports tested five mobile P2P services -- Venmo, Square's Cash App, Facebook P2P Payments in Messenger, and Zelle -- to see how they stacked up for protecting data-privacy and security.

The article is here.

Housing market is bad for poor people and getting worse

In a piece for the Washington Post wntitled In expensive cities, rents fall for the rich — but rise for the poor, Jeff Stein writes:

U.S. cities struggling with soaring housing costs have found some success in lowering rents this year, but that relief has not reached the renters most at risk of losing their housing. *  * * Since last summer, rents have fallen for the highest earners while increasing for the poorest in San Francisco, Atlanta, Nashville, Chicago, Philadelphia, Denver, Pittsburgh, Portland and Washington, D.C., among other cities. In several other metro areas — including Los Angeles, Las Vegas, Houston and Miami — rents have risen for the poor and the rich alike. * * * In San Francisco, the average rent at the bottom of the market has soared from $1,700 to $2,600, a nearly 50 percent increase. Seattle’s poor have also had their rents rise by close to 40 percent. Nationwide, since 2011,] rents for those at the bottom have increased by 18 percent. Rising rents for the poor threaten to add to the nation’s homeless population, and put an additional severe strain on tens of millions of families, often forcing them to forgo other basic needs to avoid losing their housing.

Piety Paper: Advertising as Experimentation on Human Subjects

Tamara R. Piety of Tulsa has written Advertising as Experimentation on Human Subjects. Here's the abstract:

Within the industry, it is an article of faith that consumers distrust advertising. One reason for that distrust may be that they fear being manipulated. Yet the debate about advertising and manipulation always seems to revolve around how much manipulation is really going on and whether consumer skepticism ensures that manipulation tactics will likely fail. But consumer skepticism is a flimsy defense in the face of decades of research, ever more sophisticated tactics of persuasion, billions of dollars spent, and data mining capabilities that permit increasingly detailed and granular analysis. The persuasion industry’s tactics are tested in the field, by trial and error. If a tactic works, we get more of it. In this practice we are all the guinea pigs. In a university setting, research on human subjects must be approved by an Institutional Review Board (IRB). The IRB process is supposed to ensure that research subjects’ participation is voluntary and informed, and that the potential benefits of the research outweigh the potential harms. Yet there is no IRB for our present-day marketing environment. What if it is bad for our health? More ominously still in light of recent events, what if it is bad for democracy?

Will the OCC Try to Preempt State Consumer Protection Rules in FinTech, as It Once Did for Predatory Lending?

by Jeff Sovern

That's the question David Dayen raises in an important essay in InTheseTimes, Trump Appointees Are Pushing a Deregulation Plan That Could Dramatically Erode Consumer Protections. As Dayen points out, in the run-up to the Great Recession, the OCC proclaimed that state anti-predatory lending laws were preempted as to national banks. We know how that ended. Now the OCC has announced that it will accept national bank charters from FinTech companies. When states try to regulate FinTech, will the OCC attempt to preempt their efforts too?  For example, will the OCC enable nationally-chartered FinTech companies to skirt state limits on payday lending?  That would be an ironic twist from lawmakers usually quick to claim the mantle of states' rights, and any such effort is likely to be subject to court challenges, but we could be headed there.  Under the Dodd-Frank Act, section 1044, it is probably going to depend on whether the state "law prevents or significantly interferes with the exercise by the national bank of its powers." I haven't looked into that issue enough to know whether this would qualify. But if, as seems likely for the next five or so years, we can't count on the CFPB to protect consumers, and state efforts to protect them can be preempted, consumers could be in trouble when it comes to predatory lending.

Van Loo Paper Finds CFPB Has Not Pushed Envelope as to Technology Use or Regulation

Rory Van Loo of BU has written Technology Regulation by Default: Platforms, Privacy, and the CFPB. Here's the abstract:

In the absence of a technology-focused regulator, diverse administrative agencies have been forced to develop regulatory models for governing their sphere of the data economy. These largely uncoordinated efforts offer a laboratory of regulatory experimentation on governance architecture. This symposium essay explores what the Consumer Financial Protection Bureau (CFPB) has done in its first several years to regulate financial technology (“fintech”), in the context of broader technology-related concerns identified in the literature. It begins with a survey of what the CFPB has undertaken using more traditional administrative agency tools—enforcement and rulemaking—in areas such as privacy, consumer control over data, and regulatory sandboxes. It then looks at how the CFPB has used technology to protect consumers, through Twitter and online advisory tools. The essay closes by considering open questions, including the possibility of the CFPB’s privacy activities extending its oversight of tech giants like Facebook and Amazon, and the extent to which the CFPB might exercise additional authority to inspect financial algorithms. More systematic study of the agency’s activities is needed, but the CFPB’s early experiences both provide examples that other agencies might follow and indicate the difficulty of relying on industry-specific regulators to govern the data economy, rather than an agency focused on technology.