Consumer Law & Policy Blog

Financial institutions report widespread elder financial abuse

The CFPB has released a report on financial exploitation of the elderly by people ranging from offshore scammers to family members. The report compiles information from Suspicious Activity Reports submitted by banks, credit unions, casinos, and other financial services providers. The 180,000 elder financial exploitation SARs reviewed for the report were submitted from 2013 to 2017 and involving more than $6 billion. 

The report is here.

FTC case challenges fake paid reviews on Amazon

The Federal Trade Commission announced its first case challenging a marketer’s use of fake paid reviews on an independent retail website. In a settlement announced at the same time, Cure Encapsulations and its owner resolved allegations that they made false and unsubstantiated claims for their garcinia cambogia weight-loss supplement and that they paid a third-party website to write and post fake reviews on Amazon.com, to create and maintain a a high rating.

The FTC's press release, with links to the complaint and proposed settlement, is here.

Supreme Court grants review in Fair Debt Collection Practices Act statute-of-limitations case

The Supreme Court has granted review in Rotkiskie v. Klemm. The question presented in the 8-page (!) petition for a writ of certiorari is

whether the “discovery rule” applies to toll the one (1) year statute of limitations under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692, et seq., as the Fourth and Ninth Circuits have held but the Third Circuit (sua sponte en banc) has held contrarily.

So, put somewhat differently, the question is whether the statute of limitations invariably begins to run on the date that the FDCPA violation occurs or, rather, the "discovery rule" applies in FDCPA cases (in some or all circumstances). The discovery rule provides that a limitations period begins to run "when the plaintiff knows or has reason to know of the injury which is the basis of the action."  Magnum v. Action Collection Serv. Inc., 575 F.3d 935, 940 (9th Cir. 2009) (applying discovery rule in FDCPA suit).

The FDCPA's statute of limitations says that “[a]n action to enforce any liability created by this subchapter may be brought in any appropriate United States district court . . . within one year from the date on which the violation occurs.” 15 U.S.C. § 1692k(d). 

Hayashi Paper: Consumer Law Myopia

Andrew T. Hayashi of Virginia has written Consumer Law Myopia. Here is the abstract:

People make mistakes with debt, partly because the chance to buy now and pay later tempts them to do things that are not in their long-term interest. Lenders sell credit products that exploit this vulnerability. In this Article, I argue that critiques of these products, particularly those that draw insights from behavioral law and economics, have a blind spot: they ignore what the borrowed funds are used for. By evaluating financing transactions in isolation from the underlying purchase, the cost-benefit analysis of consumer financial regulation is truncated and misleading. I show that the same bias that causes someone to take an exploitative loan may also imply that the loan benefits them by causing them to purchase a product or service that they should, but wouldn’t otherwise, buy. I demonstrate the importance of this effect in a study of tax refund anticipation loans. I find that regulation curtailing these loans reduced the use of paid tax preparers and the takeup of the earned income tax credit, which is the second largest federal transfer to low-income households.

A Way for Consumer Agencies to Generate Thought on Issues of Interest

by Jeff Sovern

A post inspired by a question I heard Kathleen Engel ask: every year second-year students ask professors for suggestions for topics to write about for law reviews. Law professors and other lawyers also cast about for article topics.  Meanwhile, administrative agencies often confront questions about what the law is or how it should develop, questions that might benefit from some thought from outsiders. It might serve all these groups--as well as the public and the development of the law--if the CFPB, FTC, and other agencies posted on their web sites a list of possible topics about which law students, law professors, and other lawyers could fruitfully write about. The ANPR process already entails something similar, but this is somewhat different in that it isn't limited to rule-making and could simply be a list which is revised from time to time.

2018 FTC annual report on refunds to consumers

According to a report issued by the Federal Trade Commission last week, between July 1, 2017 and June 30, 2018, the agency’s law enforcement actions yielded more than $2.3 billion in refunds to defrauded consumers, including $122 million mailed directly by the FTC to 2.2 million people.

The report is here.

"Google reaped millions in tax breaks as it secretly expanded its real estate footprint across the U.S."

That's the name of this story by Elizabeth Dwoskin. Here's an excerpt:

Last May, officials in Midlothian, Texas, a city near Dallas, approved more than $10 million in tax breaks for a huge, mysterious new development across from a shuttered Toys R Us warehouse. ... The developer, which incorporated with the state four months earlier, went by the name Sharka. City officials declined at the time to say who was behind Sharka. The mystery company was Google — a fact the city revealed two months later, after the project was formally approved. Larry Barnett, president of Midlothian Economic Development, one of the agencies that negotiated the data center deal, said he knew at the time the tech giant was the one seeking a decade of tax giveaways for the project, but he was prohibited from disclosing it because the company had demanded secrecy. “I'm confident that had the community known this project was under the direction of Google, people would have spoken out, but we were never given the chance to speak,” said Travis Smith, managing editor of the Waxahachie Daily Light, the local paper. “We didn't know that it was Google until after it passed.” After the deal went through, Sharka changed its main address to that of Google's headquarters in Mountain View, Calif. Site work began last fall.

A study on the relationship, if any, between Texas medical-malpractice "reform" legislation and litigation, doctor supply, and patient safety

Law profs Charlie Silver, David Hyman, and Bernard Black have published Fictions and Facts: Medical Malpractice Litigation, Physician Supply, and Health Care Spending in Texas Before and after HB 4. Note the study's findings in the abstract below:

This article, written for a symposium issue of the Texas Tech Law Review, summarizes our research on the impact of Texas’ 2003 medical malpractice (“med mal”) reform. Our central findings include: 

(1) there were no major changes in the frequency of med mal claims, payout per claim, total payouts, defense costs, or jury verdicts that can explain the spike in premiums for med mal liability insurance that occurred in Texas in the years before the 2003 reforms; 

(2) Texas’ supply of direct patient care physicians grew steadily, at similar rates, in both the pre- and post-reform periods, despite politician’s claims that physicians fled Texas before reform and flocked back thereafter; 

(3) although the damage caps adopted in Texas and other states greatly reduced the volume of malpractice litigation and payouts to patients, neither in Texas nor in other states have damage caps moderated the growth of health care spending; 

(4) the savings in liability costs generated by the Texas reforms were shared between physicians and their insurers, with the former paying lower premiums and the latter collecting more premium dollars relative to dollars paid out on claims; and 

(5) there is evidence that when liability rules are relaxed, hospital safety records gradually deteriorate.

Should the U.S. impose greater inheritance taxes to alleviate student-loan debt?

That's the topic of a bluntly-titled article -- Taxing Rich Dead People to Tackle Student Loan Debt -- by law prof Victoria J. Haneman. The abstract follows. (Note in particular the stats in the second paragraph of the abstract concerning Millennials' financial situation.)

Once upon a time, there was a generation of indentured servants called Millennials. They were ambitious and mysterious and clever and feckless, in the way that all young people can sometimes be. Droves of Millennials applied to universities, believing that a diploma was a barrier for entry to advance the careers of which they dreamt. Most were confronted with a conundrum: borrow to subsidize the dream career, with decades of (potentially unaffordable) payments when they were finally employed. The Generation Who Stole the World, commonly referred to as the Baby Boomers, had decided that unlimited access to debt in the United States was the most economically sound approach by which to offer equal opportunity in higher education, and the delectable irony of this tale is that the availability of debt accompanied the skyrocketing of costs. A vicious cycle resulted in an entire generation of educated American Millennials having mortgaged their futures — visibly sagging under the weight of the chains of their debt. The average student loan debt for the Class of 2017 graduate in the United States was $39,400.

In the U.S., Millennials are the first generation in modern history to enter adulthood far poorer than the immediately preceding generation. It is a generation that has taken on 300% more student loan debt than their parents, with Millennials between the ages of 25 and 34 each having an average of $42,000 in student loan debt. They are about half as likely to own a home as comparably-aged adults in 1976. Fifteen percent of people aged 25 to 34 live with their parents, as compared to 10% roughly thirty years ago. More than 75% of Millennials have less than $5,000 in savings, and more than 62% have more debt than savings. While wages for Millennials are stagnating, the Baby Boomers are living longer, retiring later, and hoarding jobs that should have long since been passed onto the younger generation. Baby Boomers reaped the benefits of a soaring market and robust safety net programs, whereas Millennials are bearing the brunt of the cost of three fundamental rights skyrocketing in cost — education, housing, and health care. It has been asserted that Baby Boomers have   “. . . turned the economy into a miserable hellscape and [Millennials are] just going to have to deal with it.”

 

 

Michigan Conference: Consumer Protection in an Age of Uncertainty

The University of Michigan Center for Finance, Law and Policy is holding a conference titled Consumer Protection in an Age of Uncertainty on March 21 and 22.  It's great that there will be two excellent consumer law academic conferences in so short a span!