Consumer Law & Policy Blog

Looks like companies don't like arbitration so much when consumers actually use it

by Jeff Sovern

That's the inference to be drawn from a must-read article in the NY Times, ‘Scared to Death’ by Arbitration: Companies Drowning in Their Own System. The article points out that arbitrations are taking longer than billed, and companies are refusing to pay arbitration fees.

AN ADDITIONAL NOTE: As Allison noted in an earlier blog post, Susan Antilla had a piece about DoorDash's troublesome arbitration behavior in The American Prospect back in February

Placing Consumers at the Forefront of Relief Efforts

in The American Prospect, my latest op-ed, with Norm Silber. Excerpt:

For the next stimulus package, rather than sending tens of millions of checks to consumers, Congress would do better to strike at the economic crisis by using the existing lending mechanism, right in front of us, that more than three-quarters of us already possess: credit cards. We think that Congress should pass legislation which allow banks on a monthly basis to bill the government for, say, 70 percent of the interest charges on those cards, while requiring banks to defer monthly credit card payments for all consumer cardholders for the length of the coronavirus catastrophe, perhaps as long as six months. We suggest that the benefit be capped at something like $10,000 per consumer as those charges accrue.

Do consumers have refund rights against gyms that have closed because of the coronavirus?

Guest Post by Dee Pridgen:

Consumers who have ongoing memberships at gym or fitness centers may wonder what their rights are when these facilities are shut down by government order during the corona virus pandemic.  While these clubs have contracts with provisions that probably favor the provider, there are some things consumers can do.  Some fitness chains have been willing to negotiate or to offer across the board membership freezes with credits tacked on to the end of the contract to make up for closed periods.  If that doesn’t work, consumers may need to stop payments and try to resist being charged for services not provided.  Some states, such as New York, do have some provisions for consumers to cancel the contract and get a refund if the club cannot provide the promised services.  The past due membership fees could be sent to a debt collector, but consumers should contest charges for non-service, and also contact the state attorney general consumer protection division.  For more, go here and here.   

CFPB announces it won't hold credit bureaus and furnishers of information to the FCRA 30 day investigation deadlines . . .

by Jeff Sovern

. .  . during the pandemic as long as they act in good faith, according to a Policy Statement. The Policy Statement shouldn't affect private enforcement of the deadlines for investigating errors in consumer reports, however.

NCLC: How to ensure that COVID-19 stimulus checks aren't grabbed by debt collectors

Read U.S. Treasury Must Protect Stimulus Payments From Garnishment by Debt Collectors from the National Consumer Law Center. Here's an excerpt:

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides for payments to individuals up to $1,200 so that people can pay for food, rent, utilities, medicine, and other basic necessities.  The CARES Act protects stimulus checks from being reduced to pay certain debts owed to federal and state governments but does not specifically address garnishment or bank offsets for other debts. Instead, it gives Treasury the authority to issue rules and guidance to carry out the purposes of the stimulus payments.

Coding the payments as federal benefits will serve these important purposes:

• • The payments will be available for food, medicine, utilities, and rent as Congress intended and will not be seized by debt collectors, depriving recipients of the ability to pay for essentials.
  • Banks already have systems in place that will automatically protect the payments so there is no need to develop additional procedures.
  • Banks will not have to deal with irate customers when desperately needed funds disappear.
  • State governments and courts will not have to issue emergency orders to protect these payments, or handle disputes about them, putting banks in the middle.
  • People can provide direct deposit information to the Treasury Department without fear of losing their funds so they can receive their payments quickly and safely. Otherwise, consumer advocates, legal services offices, credit counselors, and others will be forced to counsel struggling families to avoid direct deposit and wait for a paper check.
  • The Treasury Department will have far fewer requests for paper checks to deliver stimulus payments.