Consumer Law & Policy Blog

Read this op-ed on CFPB's proposed rule authorizing debt-collection harassment

In May, the Consumer Financial Protection Bureau proposed new Fair Debt Collection Practices Act rules. In this op-ed, Jennifer Wagner (of Mountain State Justice) and Linda Frame (of the West Virginia Center on Budget and Policy) explain why the CFPB's proposed rules, issued under a law meant to curb debt-collection harassment, actually authorize debt-collection harassment. "The most brazen breach of consumer protection [in the proposed rules] ... is allowing consumers to be called up to seven times per week per debt. Someone with eight medical debts could hear the phone ringing 56 times a week." Ugh.

Federal Trade Commission issues staff report on class-action notices, redress methods, claims rates, and check-cashing rates; agency sets comment period and October 29 public meeting

The Federal Trade Commission has issued a staff report on class-action notices, redress methods, claims rates, and check-cashing rates based on the agency's survey of the results in 149 consumer class actions. The FTC has put together this home page on the report, which contains links to related information. 

Consistent with other data and anecdotal reports, the FTC staff report finds that claiming rates in consumer class actions are generally quite low. But check cashing rates -- that is, how often consumers cash checks received as relief in class actions -- generally are quite high. These two things -- (1) low claiming rates and (2) high check-cashing rates -- tell us that, whenever possible, class-action settlements should provide class members relief without requiring them to file claims. That is, so-called "claims-made" settlements should be avoided where possible. Put differently, class members want their relief, but a whole bunch of rigmarole suppresses class-member recovery. 

On October 29, 2019, the FTC will hold a public workshop in Washington, DC on improving class action settlement notices for consumers. The workshop is free and open to the public. Seating is first-come, first-served. The workshop is at the Constitution Center, 400 7th St., SW, Washington, DC, and will be webcast live. The October 29 workshop is intended to support the agency's continuing examination of the issues addressed in the staff report.

The FTC is asking for written comments on the report. Comments may be submitted electronically at Regulations.gov, or in paper form on these topics or other related topics through November 22, 2019. Paper comments may be mailed to FTC, Office of the Secretary, 600 Pennsylvania Avenue N.W., Suite CC-5610 (Annex B), Washington, DC 20580, or delivered to FTC, Office of the Secretary, 400 7th Street SW, 5th Floor, Suite 5610 (Annex B), Washington, DC 20024. Commenters should write “Class Action Notices, Project No. P024210” on the comment so that it will be identified with the workshop.

 

"CPFB head misguided in reliance on consumer education"

That's the title of this piece in The Hill by law prof Lauren Willis. WIllis's bio notes that "[s]he is a leading critic of the use of financial education, disclosures, and 'nudges' (default settings) in consumer policy-making." Willis's Hill piece applies that critique to the regulatory approach of the Consumer Financial Protection Bureau under the direction of Trump appointee Kathy Kraninger. Willis's piece starts like this:

Imagine that your city’s water treatment facility announced tomorrow that it would scale back its work. Instead, the authorities would offer online classes and put up posters around town to teach city residents about contaminants and filtration. With slogans about “empowering consumers,” they would urge residents to make their own choices about the water safety level that’s right for them, based on individual health needs and taste preferences. People would surely protest. It is both foolish and cruel to put the onus on ordinary citizens to handle an issue that requires professional training to fully understand and that can devastate people’s lives if handled poorly. It seems cynically designed to relieve city administrators — and the businesses that impact the city’s water supply — of their responsibilities. Yet this is exactly what’s happening today in the consumer financial marketplace at the federal level.

Take the Abusiveness Challenge: Identify a Valuable Consumer Financial Product Not Offered Because of Uncertainty About Whether It Is Abusive

by Jeff Sovern

The Dodd-Frank Act gives the CFPB the power to act against entities within the CFPB's jurisdiction for engaging in abusive practices. See 12 USC 5531.  Though that section explains what the limits are to the Bureau's power to proscribe abusive conduct, the industry has long claimed that it needs additional guidance as to what is abusive. The industry argues that the statute's ambiguity will cause a company to withhold from the market a product at least some consumers want because the company fears the Bureau will find the product abusive.  There's just one problem with this scenario: despite the fact that the Dodd-Frank Act has been around since 2010, no one has actually identified such a product, at least not that I know of.  I have just finished listening to the Bureau's excellent symposium on abusiveness (and if you care about what abusive means you should listen to it too) and I didn't hear a single example of such a product. If you know of such a product, please describe it in the comments. It's not just a consumer-advocate talking point; if such a product exists and can be discussed, it would make the debate about abusiveness much more concrete. In the meantime, if no one can identify such a product, the Bureau should take its time before issuing a guidance or other document concerning the meaning of abusive, just as the FTC took decades to issue policy statements explaining the meaning of unfairness and deception. 

"How Amazon Hooked America on Fast Delivery While Avoiding Responsibility for Crashes"

ProPublica has a new report out today called "The Deadly Race: How Amazon Hooked America on Fast Delivery While Avoiding Responsibility for Crashes." The report explains that "Amazon has built a huge logistics operation in recent years to get more goods to customers’ homes in less and less time. As it moves to reduce its reliance on legacy carriers like United Parcel Service, the retailer has created a network of contractors across the country that allows the company to expand and shrink the delivery force as needed, while avoiding the costs of taking on permanent employees." But, the report continues,"Amazon’s promise of speedy delivery has come at a price, one largely hidden from public view. An investigation by ProPublica identified more than 60 accidents since June 2015 involving Amazon delivery contractors that resulted in serious injuries, including 10 deaths."

The full report is here.

Dep't of Education rejects 99% of requests for Public Service Loan Forgiveness

The Public Service Loan Forgiveness program encourages graduates to work in public service jobs by forgiving federal student loan balances for borrowers who have made 10 years of payments while in certain public service jobs. In 2018, after the Department of Education forgave few loans, Congress temporarily expanded the program to include more borrowers.

According to a report by the Government Accountability Office, the Department of Education continues to reject requests for loan forgiveness under the program--rejecting 99% of the requests. From May 2018 to May 2019, the Department processed roughly 54,000 requests and approved just 661. It spent only $27 million of the $700 million allocated by Congress.

The GAO report, as well as a short fact sheet, is here.

Companies lobby for changes to California's consumer privacy law

Last year, the California legislature passed the California Consumer Privacy Act, which grants internet users the right to see the personal information that companies collect about them and stop it from being sold. The law applies only to residents of California, but privacy advocates hope it might serve as a model for other states or Congress and that it will eventually force the tech giants to change their practices with respect to consumer privacy.

Today, the Washington Post reports on an effort by tech companies, retailers, and other businesses to convince the legislature to revise the law before it goes into effect this coming January.

The article is here.

James Nehf Paper: The Failure of 'Notice and Consent' as Effective Consumer Policy

James P. Nehf of Indiana--Indianapolis has written The Failure of 'Notice and Consent' as Effective Consumer Policy. Here's the abstract:

Over the past several decades, the preferred model for consumer protection in most countries has emphasized a notice and consent (or choice) approach with less emphasis on normative laws that prohibit or mandate certain contract terms, acts or practices. In this essay, I argue that it is time for consumer advocates and policy makers to recognize that a notice and consent approach to standard contract terms and conditions is not likely to protect consumer interests in modern day contractual settings. Indeed, policy makers are doing more harm than good by continuing to focus on notice and consent, thereby giving a misleading impression that consumer interests are being protected when they are not. Moreover, by adhering to a notice and consent regime, they avoid discussing the more difficult yet most fundamental questions about what commercial practices should be permitted and which should be banned.