Consumer Law & Policy Blog

Opposition to CFPB's proposed rescission of protections for payday borrowers

Public Citizen, along with the Center for Responsible Lending and several other consumer-advocacy groups, submitted a lengthy comment objecting to the CFPB's proposal to rescind many aspects of the agency's own payday lending rule, issued in 2017 to protect consumers from harmful payday lending practices. The comment is here. If you are not up for reading the full 220-page document, the executive summary is available here.

Investigation shows that things unrelated to driving record -- such as sex and zip code -- can jack up car insurance rates

An investigation by the Chicago Sun-Times found that "[y]ou could be a great driver, but still have to pay more [for car insurance] because of reasons unrelated to driving," such as sex, where you live, and whether you rent or own your home. Read this Sun-Times article by Stephanie Zimmerman for more details. 

Congress is considering privacy legislation – be afraid

by Jeff Sovern

That's the title of my latest essay for The Conversation, about how preemption of state privacy laws could harm consumers.  Here's an excerpt:

[R]ather than circumventing state laws, a federal privacy law should work in partnership with them – just as federal laws regulating auto safety such as airbag requirements operate in tandem with state regulations that govern related issues such as how fast motorists can drive.

Industry advocates, however, don’t want federal and state laws to exist side by side because they say companies will have trouble following the rules of different states. Businesses had the same concerns about state data breach laws, and testimony from Marriott’s CEO suggests the company didn’t find it too troublesome to comply with them, however different.

It’s more likely, then, that companies realize that it will be easier for their lobbyists to win a victory in one legislature – Congress – than in 50 states.

Lobbyists have also argued consumers would be bewildered by such a patchwork of state privacy laws. They claimed, for example, that a consumer driving from Biloxi, Mississippi, to Bellevue, Washington, would be confused by the different privacy regimes she would encounter.

But that same person – during that same drive – copes with a wide variety of traffic laws. Drivers seem to be able to navigate those different laws just fine.

A proposal to provide, under current law, some bankruptcy relief to student-loan debtors

Law profs Matthew Bruckner, Brook Gotberg, Dalie Jimenez, and Chrystin Ondersma have written A No-Contest Discharge for Uncollectable Student Loans. Here is the abstract (complete with a list of circumstances in which, the authors say, student-loan debt should be discharged in bankruptcy on a no-contest basis):

Over 44 million Americans owe more than 1.4 trillion dollars in student loan debt. This debt is uniquely difficult to shed in bankruptcy; even attempting to do so usually requires costly and contentious litigation with the Department of Education, and initial success may be followed by years of appeals by the Department of Education. As a result, very few student loan borrowers even attempt to discharge their student loan debt in bankruptcy.

In this Article, we call on the Department of Education to develop a set of nine easily calculable and verifiable circumstances in which it will not contest a debtor’s attempt to discharge her student loan debt. Nearly every category of “no-contest” discharge represents a circumstance where the debtor would clearly suffer an undue hardship if forced to continue to attempt repayment, such that the Department of Education should conserve taxpayer dollars by consenting to discharge. Specifically, we urge the Department of Education to allow a “no-contest” discharge when the debtor’s income is less than 150% of the federal poverty level and:

(1) household income has been at or below the federal poverty level for the last four years;
(2) the debtor receives disability benefits under the Social Security Act;
(3) the debtor receives disability benefits because of military service;
(4) the debtor’s income is derived solely from retirement benefits;
(5) the debtor is a caregiver of an adult or child as defined in the Lifetime Respite Care Act;
(6) the debtor is a family caregiver of an eligible veteran;
(7) the debtor did not receive a degree from the institution or the institution closed;
(8) the debtor owes less than $5,000; or
(9) the debtor has been repaying their student loans for more than 25 years. 

Our proposal will not solve every problem, but it would go a long way towards resolving many of the grosser inequities currently associated with student loans and their treatment in bankruptcy.

Dept of Education blocking CFPB oversight of student loan servicing

In a letter responding to an inquiry from Senator Warren, the director of the Consumer Financial Protection Bureau says that the Education Department is hampering the CFPB's efforts to protect borrowers by performing oversight of the student loan industry. The Senators' letter has asked whether the federal regulator had "abandoned its supervision and enforcement activities" related to more than $1 trillion in student loans.

The CFPB letter states that companies that student loan servicing companies are refusing to share information that the CFPB needs to perform oversight because the Department of Education has issued guidance telling them not to do so.

NPR has the story, here, along with a link to the CFPB's letter.

ALI Makes Its Tentative Draft Broadly Available to the Public, while Insisting that It Could Sue for Infringement

by Paul Alan Levy

As reflected in an update to my blog post from yesterday, ALI has issued a blustery letter insisting that it did no wrong by trying to enforce its copyright against Adam Levitin's publicly posting of the Tentative Draft its Restatement, while at the same time publicly posting the Tentative Draft.

23 state AGs urge American Law Institute to reject draft Restatement of the Law of Consumer Contracts

Yesterday, 23 state attorneys general wrote to all members of the American Law Institute urging them to reject the draft Restatement of the Law of Consumer Contracts, calling it "an abandonment of important principles of consumer protection in exchange for illusory benefits." Read the AGs' letter here. For our other recent coverage of the draft Restatement, including the ALI's effort to undermine opposition to the draft through copyright law, go here and here.

American Law Institute Misusing Copyright to Prop Up Its Proposed Restatement on the Eve of Voting

by Paul Alan Levy

The Proposed Restatement of the Law of Consumer Contracts has been discussed on this blog many times. It is exceptionally controversial: it has been opposed by a large coalition of consumer and civil rights advocacy groups (including Public Citizen) as well as attorneys general from roughly half the states. The US Chamber of Commerce and a large coterie of banking and other industry trade groups has also opposed the Draft from a different perspective. As part of his campaign to get the draft rejected by the ALI membership, Georgetown law professor Adam Levitin posted the draft on Dropbox so that his readers could readily access the document and thus understand the basis for the objections. He intended to leave it posted only until the ALI membership conducted its vote on the draft, scheduled to be held at ALI’s annual meeting on May 21.

On the eve of that meeting, ALI’s leadership stepped in with a series of peremptory emails demanding that the document be taken down. It asserted that Tentative Drafts are subject to ALI’s copyright, and that ALI finances its activities by selling copies of its Restatements; in response to Levitin’s invocation of fair use, it insisted that only excerpts can qualify as fair use.

Yesterday, I responded to ALI’s demands, showing that copying the entirety of a copyrighted work can be fair use when justified by the purpose of the use, such as criticism, showing that the other fair use factors supported Levitin’s right to show the public the full proposed draft, and arguing that ALI was engaged in copyright misuse, attempting to disable the "vote no" campaign.

Kavanaugh v. Gorsuch, er, I mean, Apple, Inc. v. Pepper

For the second time this Supreme Court Term, Justice Gorsuch has dissented from a majority opinion by Justice Kavanaugh. Both times, the beneficiary of Kavanaugh's vote has been a plaintiff whose cause of action Kavanaugh would recognize but Gorsuch would not. In today's opinion, Apple, Inc. v. Pepper, the result is that consumers seeking to sue Apple for monopolizing the retail market for iPhone apps can proceed with their suit. (The previous Kavanaugh-Gorsuch split came in a case called Air & Liquid Systems Corp. v. DeVries, in which Kavanaugh's opinion allowed plaintiffs to sue shipbuilders for failing to warn of harms caused by asbestos components that the shipbuilders did not themselves manufacture but knew would be used in the ships.)

The Apple decision concerned whether the so-called "Illinois Brick" rule, which prohibits indirect purchasers from bringing antitrust claims against companies higher up a supply chain with whom they didn't do business directly, bars app purchasers from suing Apple. Apple claimed that app purchase consumers are sorta like indirect purchasers because, according to Apple, app developers and not Apple determine the prices that will be paid for their apps.

Kavanaugh crisply disagreed. ''It is undisputed that the iPhone owners bought the apps directly from Apple. Therefore, under Illinois Brick, the iPhone owners were direct purchasers who may sue Apple for alleged monopolization." There's a bit more to the opinion than that, but that is the gist. Kavanaugh's "straightforward" conclusion was joined by the Court's four liberals, while the remaining conservatives joined Justice Gorsuch.

States accuse generic drug manufactrurers of price fixing

On Friday, Connecticut and a coalition of 44 states sued the biggest generic drug manufacturers, accusing them of a systematic conspiracy to bilk consumers out of billions of dollars. Last night's 60 Minutes covered the story, here. The Connecticut Attorney General's press release is here.