Consumer Law & Policy Blog

Comments to CFPB Conservative/Industry Taskforce Due June 1 During a Pandemic

by Jeff Sovern

As we previously noted, the CFPB's Conservative/Industry Taskforce created to make "recommendations for ways to improve and strengthen consumer financial laws and regulations" issued a request for information. Comments are due Monday, June 1. As far as I know, the deadline for commenting has not been extended, despite the fact that we are in a pandemic and there have been requests for an extension. I filed a very short comment complaining about the composition of the taskforce and that the deadline for the request for information is ill-timed. I urge readers of the blog to do the same. The body of my comment appears below the fold.

Foohey, Jiménez & Odinet: The Debt Collection Pandemic

Pamela Foohey of Indiana Maurer, Dalié Jiménez of Irvine, and Christopher K. Odinet of Iowa have written The Debt Collection Pandemic, California Law Review Online (2020 Forthcoming). Here is the abstract:

As of May 2020, the United States' reaction to the unique and alarming threat of COVID-19 has partially succeeded in slowing the virus’s spread. Saving people’s lives, however, came at a severe economic cost. Americans’ economic anxiety understandably spiked. In addition to worrying about meeting basic expenses, people’s anxieties about money necessarily included what might happen if they could not cover already outstanding debts. The nearly 70 million Americans with debts already in collection faced heightened anxiety about their inability to pay.

The coronavirus pandemic is set to metastasize into a debt collection pandemic. The federal government can and should do something to put a halt to debt collection until people can get back to work and earn money to pay their debts. Yet it has done nothing to help people deal with their debts. Instead, states have tried to solve issues with debt collection in a myriad of patchwork and inconsistent ways. These efforts help some people and are worthwhile. But more efficient and comprehensive solutions exist. Because debt collection brought by the COVID-19 crisis will not dissipate anytime soon, even after the crisis ends, the need to implement comprehensive, longer-lasting solutions remains. These solutions largely fall on the shoulders of the federal government, though state attorney generals have the necessary power to help people effectively, provided they act in concert. If the government continues on its present course, a debt collection pandemic will follow the coronavirus pandemic.

Forbes: Stimulus Proposal: $10,000 In Credit Card Interest Relief During Coronavirus Pandemic

Here, by Shahar Ziv, taking a deep dive into Norm Silber's and my proposal. Excerpt:

Sadly, the coronavirus pandemic isn’t the first catastrophe to fuel consumer credit challenges. In a paper, Thriving on Adversity: Disclosing Corporate Mistreatment of Consumers Caught in Hurricanes Katrina and Rita and Exploring the Consumer Movement's Response to Crisis and Catastrophe, which was published in the Loyola Consumer Law Review, Norman Silber, the proposal’s lead author, outlined the progressive obstacles that consumers faced in the wake of Hurricane Katrina: Americans let credit balances grow and could only afford to make minimum payments; high interest rates caused the amount owed to increase rapidly, which reduced the amount of available credit; credit scores started to drop, reducing credit lines and access to affordable borrowing; delinquencies and bankruptcies began to rise causing a strain on the national economy. “There were huge problems created as consumers, who were out of work and had extra expenses, all of a sudden couldn’t make installment payments,” Silber told me via phone. “Banks and credit card companies who were supposedly generous by postponing payments and interest, just deferred the problem and eventually starting charging consumers additional fees and getting tough with them.”

Applying the lessons learned from Katrina against the backdrop of the Covid-19 crisis, Silber and Sovern developed a proposal, called the “Credit Card Interest Relief During the Pandemic Act” or CIRPA, to allow consumers and small businesses financed through credit card borrowing to have the credit they need to get past this crisis.

The relationship between the massive pre-virus tax cuts and tariffs and the covid-19 recession

That's the topic of this piece by LA Times reporter Don Lee.

"Consumer bureau draws fire for pro-business tilt during crisis"

Read this article by Katy O'Donnell at Politico about the CFPB's activities during the health crisis. Here's an exerpt:

The Consumer Financial Protection Bureau is relaxing rules designed to shield Americans from abuse during the coronavirus crisis, saying the moves are necessary to give businesses flexibility during the pandemic. But with the agency facing an unprecedented wave of consumer complaints as millions of laid-off workers deal with their creditors, lawmakers and consumer advocates charge that the bureau is exploiting the crisis to further a pro-industry agenda. They’re demanding that it set aside all rulemaking unrelated to the crisis and take a more forceful stance toward businesses that could use the chaos to rip off consumers. 

Some states suspending open-government laws in light of covid-19

That's disturbing. Read the May 1, 2020 article entitled States Are Suspending Public Records Access Due to COVID-19 by reporter Colin Lecher. HT Erin Caroll (@erinccarroll13).

Third Circuit holds, in split decision, that faxes soliciting participation by the recipients in market research surveys in exchange for money are "advertisements" triggering TCPA coverage

Read the Third Circuit's decision in Fischbein v. Olson Research Group. The beginning of the court's majority opinion explains the holding:

In this pair of appeals, we are asked to decide whether faxes soliciting participation by the recipients in market research surveysin exchange for monetary payments are advertisements within the meaning of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (b)(1)(C) (“TCPA”), which prohibits the transmission of unsolicited fax advertisements. Applying our recent precedent in Mauthe v. Optum, Inc., 925 F.3d 129 (3d Cir. 2019), the District Courts dismissed both cases under Federal Rule of Civil Procedure 12(b)(6) as the Courts concluded that such surveys are not advertisements within the TCPA because they did not attempt to sell anything to their recipients. We hold, however, that solicitations to buy products, goods, or services can be advertisements under the TCPA and the solicitations for participation in the surveys in exchange for $200.00 by one sender and $150.00 by the other sender were for services within the TCPA.

What's the deal with Yada Yada Law School not offering consumer law?

by Jeff Sovern

Regular blog readers know that from time to time, we report on the number of law schools offering consumer law courses course. Well, sadly, a new entrant on the law school front, Yada Yada Law School, is not offering consumer law.  What's the deal with that?

Senate Judiciary Committee holds hearing on proposal to eliminate business liability to consumers for infecting them with Covid-19

by Jeff Sovern

The video and prepared testimony is here. If you have time to read only one, I recommend David Vladeck's excellent statement. 

Though Senate Majority Leader Mitch McConnell has described this terrible proposal as a "red line" for future coronavirus bills, it appears he does not have the full support of his caucus. Republican Senator Mike Lee expressed concerns about the intrusion of a federal law into the state torts domain.

CFPB's "Conflicted Task Force Earning Top Dollar"

Bloomberg reports that a "Consumer Financial Protection Bureau task force that has been criticized in the past for its pro-business leanings stands to earn hundreds of thousands of dollars to offer advice on how to 'harmonize and modernize' federal laws aimed at protecting the public." The full story is here.