Consumer Law & Policy Blog

Arizona payday lenders oppose minimum wage increases; one acknowledges that increasing the minimum wage may hurt business

David Dayen has the story in The American Prospect. Here's an excerpt, but the entire story is worth a look:

It may seem axiomatic, but it’s rarely stated out loud: Businesses that rely on poor people need the economic system to keep churning out poor people to survive. You almost have to applaud the payday lending industry for finally making this explicit in Arizona.

A proposed constitutional amendment that looks likely to hit the ballot there next year would limit future increases to the minimum wage, may claw back scheduled increases already set to take effect, and eliminate a week of paid sick leave. One of the payday lending industry’s leading trade associations has bankrolled the measure, making plain the connection between a lack of income and the spread of predatory financial services. * * *

* * *

* * * The annual Securities and Exchange Commission report of Elevate Financial, a publicly traded short-term lender, does contain such honesty. In a description of various risk factors to the business, Elevate writes, “Decreased demand for non-prime loans as a result of increased savings or income could result in a loss of revenues or decline in profitability … For instance, an increase in state or federal minimum wage requirements … could decrease demand for non-prime loans.”

 

Marketing profs explain why bad customer service isn't going to get better and why companies don't care

Here, in The Conversation, by Anthony Dukes, Professor of Marketing, University of Southern California and Yi Zhu, Associate Professor of Marketing, University of Minnesota. Excerpt: 

Many complaint processes are actually designed to help companies retain profits by limiting the number of customers who can successfully resolve their complaints.

Only by insisting to talk to a manager or threatening to leave the company do consumers come closer to obtaining a refund.

* * *

[N]avigating an online complaint process is generally harder for older people.

Additionally, African American and Latino customers are less inclined to complain than college-educated whites.

In addition, women get more annoyed than men when dealing with bad customer service.

This all suggests that the tiered process may hit vulnerable groups in our society harder. 

* * *

[O]ur research suggests that in markets without much competition, companies are more likely to implement a tiered complaint process and profit from the reduced payouts to customers.

Congress should really look into this. 

Senate report faults CPSC for failure to recall dangerous products

An investigation by Senator Cantwell's oversight staff found that a "series of high-profile failures to effectively recall dangerous products has called into question the ability of the U.S. Consumer Product Safety Commission (CPSC) to adequately protect American consumers from unsafe and defective products. An extensive review by U.S. Senate Committee on Commerce, Science, and Transportation Minority staff shows that these failures have not occurred due to staffing shortages or lack of legal authority. Instead, they are the result of a pattern of inappropriate deference to industry that has characterized CPSC leadership in recent years."

The report focuses on CPSC actions involving the BOB jogging stroller, the Fisher-Price Rock ‘n Play inclined infant sleeper, and residential elevator safety--three examples that it says illustrate a failure by past CPSC leadership to adequately protect consumers from the dangers of these product hazards. The report also includes recommendations to prevent such failures from being repeated.

The report is here.

California's consumer privacy law takes effect on January 1

The Washington Post today reports on the expected effect of California's consumer privacy law, which was enacted in June 2018 and takes effect on January 1, 2020. The law aims to protect consumers from having their information sold without their knowledge or consent. The article -- Calif consumer privacy law can affect businesses across U.S. -- is here.

Investigation into the smartphone tracking industry

The New York Times has a lengthy piece today on location tracking through smartphones.

Every minute of every day, everywhere on the planet, dozens of companies — largely unregulated, little scrutinized — are logging the movements of tens of millions of people with mobile phones and storing the information in gigantic data files. The Times Privacy Project obtained one such file, by far the largest and most sensitive ever to be reviewed by journalists. It holds more than 50 billion location pings from the phones of more than 12 million Americans as they moved through several major cities, including Washington, New York, San Francisco and Los Angeles. Each piece of information in this file represents the precise location of a single smartphone over a period of several months in 2016 and 2017. The data was provided to Times Opinion by sources who asked to remain anonymous because they were not authorized to share it and could face severe penalties for doing so. The sources of the information said they had grown alarmed about how it might be abused and urgently wanted to inform the public and lawmakers. After spending months sifting through the data, tracking the movements of people across the country and speaking with dozens of data companies, technologists, lawyers and academics who study this field, we feel the same sense of alarm. In the cities that the data file covers, it tracks people from nearly every neighborhood and block, whether they live in mobile homes in Alexandria, Va., or luxury towers in Manhattan.

The full article is here.

Advances or payday loans?

An article in The Atlantic yesterday reported on apps that offer "advances" on salary. Although the companies that offer the apps insist that the advances are not "loans," the article explains that the companies look a lot like payday lenders. The "advances" come with many of the same problems as payday loans, problems that have led many states to restrict or ban such loans. The article is here.

"The Decade Class Actions Were Gutted"

An article in Slate today addresses the Supreme Court's cases greatly restricting the availability of class actions as a recourse for the powerless against the powerful, largely through an atextual expansion of the Federal Arbitration Act. As the article notes, "[t]he swift decline of class actions over the last decade is regularly framed as an access-to-justice issue. But it is also a threat to the rule of law."

The article is here.

Why a Wealth Tax is Definitely Constitutional

That's the name of this article by law profs John Brooks and David Gamage. Here is the abstract:

Wealth tax reform proposals are playing a major role in the 2020 presidential campaign. However, some opponents of these wealth tax reform proposals have claimed that a wealth tax would be unconstitutional. Other prominent critics have argued that wealth tax reforms are probably unconstitutional, so that, after review by the courts, the “likeliest outcome is that a wealth tax will raise exactly zero dollars.”

These claims are wrong. More precisely, these claims are wrong conditioned on wealth tax legislation being carefully drafted so as to ensure its constitutionality. As we will explain in this essay, properly drafted, wealth tax reform legislation is definitely constitutional and thus capable of raising substantial revenues to fund new spending programs.

Constitutional scholars disagree about whether a new federal wealth tax would need to be "uniform" or "apportioned" in order to be constitutional. We explain how wealth tax legislation could be drafted to ensure its constitutionality regardless of how the Supreme Court ultimately decides on this question. In particular, we explain how Congress could design an apportioned federal wealth tax made equitable through the use of a fiscal equalization program, and could legislate this as a fallback option in case the Supreme Court were to rule against an unapportioned federal wealth tax.

EEOC flips position and decides forced arbitration of discrimination claims is totally okay.

"The EEOC voted 2-1 to rescind its position that mandatory arbitration agreements that keep discrimination claims out of court clash with the civil rights laws the agency enforces." Read about it here. 

NY Times: This Is What Racism Sounds Like in the Banking Industry

Here.  Excerpt:

Jimmy Kennedy earned $13 million during his nine-year career as a player in the National Football League. He was the kind of person most banks would be happy to have as a client.

But when Mr. Kennedy tried to become a “private client” at JPMorgan Chase, an elite designation that would earn him travel discounts, exclusive event invitations and better deals on loans, he kept getting the runaround.

At first, he didn’t understand why. Then, last fall, he showed up at his local JPMorgan branch in Arizona, and an employee offered an explanation.

“You’re bigger than the average person, period. And you’re also an African-American,” the employee, Charles Belton, who is black, told Mr. Kennedy. “We’re in Arizona. I don’t have to tell you about what the demographics are in Arizona. They don’t see people like you a lot.” Mr. Kennedy recorded the conversation and shared it with The New York Times.