Consumer Law & Policy Blog

CFPB new debt collection rules less bad than as proposed but still insufficiently protective of consumers

The new rules are here. NACA and other groups, calling the rules a "mixed bag for consumers," comment here. Consumer Reports ("CFPB rules fail to protect consumers from abusive debt collection harassment") comments here. The Bureau said it intends to issue more rules in December.

Dee Pridgen authors new edition of Consumer Protection Law in a Nutshell

West has published the fifth edition of Dee Pridgen's Consumer Protection Law in a Nutshell, the best short introduction to consumer protection law and an extremely useful volume for students and practitioners alike (disclosure: I commented on the manuscript of the fourth edition and coauthor a casebook with Dee). Here are some of the bigger changes from the fourth edition, which is also a review of the changes in consumer protection law over the four years since the last edition:

 

• Seila Law Firm v. CFPB, 2020 S. Ct. ruling on constitutionality of CFPB structure, single director terminable only for cause
• Pullback of Payday Lending Rule by CFPB
• New CFPB stored value/prepaid account rule, bringing these newer forms of consumer payment under the protection of Regulation E, requiring pre-purchase fee disclosures and other safeguards for combined prepaid/credit cards. Campus cards, used to distribute financial aid, receive some special protections as well under a Department of Education regulation.  
• Discussion of newer forms of electronic consumer payments, including Internet based peer-to-peer systems, mobile based systems, and so-called virtual or crypto currency.
• Details on the proposed CFPB rule implementing FDCPA, including provisions on collection of debts past the applicable statute of limitations, limits on telephone calls, and use of email and text messages for debt collection,
• 2017 U.S. Supreme Court case, Henson v. Santander Consumer USA, Inc., holding that debt buyers who are collecting their own purchased debts are not considered to be “debt collectors” under the FDCPA, and thus not subject to its requirements.
• Congressional veto of CFPB Rule banning class action waivers in arbitration clauses
• Regulatory status of “Fintech” (internet based) lenders, “earned wage advances,” and use of expanded creditworthiness factors by fintech lenders potentially resulting in discrimination
• Regulation of “native” ads and consumer reviews on social media
• FTC enforcement of the Restore Online Shoppers’ Confidence Act (ROSCA), which regulates negative option marketing on the Internet.
• FTC settlement with major multi-level marketer Herbalife, seller of dietary supplements
• New developments in enforceability of online contract terms, including proposed ALI Restatement of the Law of Consumer Contracts
• FTC’s record-breaking privacy enforcement action against tech giant Facebook
• New California comprehensive consumer privacy legislation.
• Historic multi-agency settlement with Equifax, to settle charges related to massive data breach involving consumers’ personal financial information
• Effect of constitutional Article III standing requirement for private lawsuits in federal court in cases involving federal consumer protection statutes, stemming from landmark U.S. Supreme Court decision involving FCRA, Spokeo, Inc. v. Robins (2016)
• New federal law requires Consumer Reporting Agencies to provide all consumers with an option to place a “security freeze” on their credit records, free of charge.
• Recent developments in TILA enforcement
• 2018 amendments to FTC Used Car Rule Buyers Guide

Adar & Becher paper proposes administrative oversight of consumer form contracts

Yehuda Adar of the University of Haifa and Shmuel I. Becher of the Victoria University of Wellington have written Taking Boilerplate Seriously: Tackling Exploitation in Consumer Contracts. Here's the abstract:

This Article calls for a conceptual shift toward the scrutiny of exploitative consumer standard form contracts. Current approaches to consumer standard form contracts assume that imbalanced and unfair terms can be adequately challenged by aggrieved consumers and effectively scrutinized by vigilant courts. Some even believe that market forces and reputational constraints can deter firms from employing exploitative terms in their form contracts or dissuade them from actually relying on such terms. Criticizing these assumptions, the Article suggests supplementing the current means of addressing opportunistic exploitation in standard consumer contracts with a dynamic preventive machinery.

Specifically, we propose a professional system of administrative oversight over the content of consumer form contracts. The Article demonstrates how such a machinery can efficiently tackle the widespread use of unfair practices as well as unconscionable and plainly illegal terms. While not a panacea, such a regime has the promise of shifting the burden of confronting exploitation in consumer contracts from a feeble and ineffective system of private enforcement to a sophisticated and robust system of public oversight.

NCLC report: States that Put Families at Risk of Poverty During the Covid Crisis

The National Consumer Law Center issued a report on the impact of debt-collection during the pandemic and state laws that help, or harm, struggling families. From NCLC's press release:

As millions of families suffer job loss or struggle to pay bills during COVID-19, states have an important role in protecting them from seizure of essential wages and property to pay old debts. A new state survey from the National Consumer Law Center finds that not one jurisdiction’s laws meet basic standards so that debtors can continue to work productively to support themselves and their families. No Fresh Start 2020: Will States Let Debt Collectors Push Families into Poverty in the Wake of a Pandemic? surveys the exemption laws of the 50 states, the District of Columbia (D.C.), Puerto Rico, and the Virgin Islands that protect wages, assets in a bank account, and property from seizure by creditors. “By reforming their exemption laws, states will not only protect families from destitution but will promote economic recovery by enabling families to spend their money in state and local communities,” said Carolyn Carter, National Consumer Law Center deputy director and author of the report.

The COVID-19 pandemic has exposed the enormous gaps in the states’ exemption laws. Only when stimulus checks were deposited in families’ bank accounts and garnished by debt collectors did many states realize that they had no state laws to protect a basic amount in a family’s bank account. Once the pandemic recedes, families struggling to get back on their feet are likely to face a wave of debt collector lawsuits for medical bills, back rent, credit card debt, the balance due on repossessed cars, and even utility bills.

Weak exemption laws also exacerbate the racial wealth gap. Communities of color are disproportionately burdened by debt, disproportionately subject to judgments in collection lawsuits, and disproportionately subject to wage garnishment. Because of longstanding discrimination, Black and Latinx households have less wealth and less of a safety net to draw on during challenging financial times. Communities of color have disproportionately suffered the effects of the pandemic — not just job loss and financial hardship but also illness and death.

Berkeley Law Seeks Executive Director for Center for Consumer Law and Economic Justice

Berkeley Law seeks applications for the full-time position of Executive Director (Academic Coordinator II) for the Center for Consumer Law and Economic Justice (CLEJ) with an anticipated start date of December 1, 2020. This is a two-year, full-time (100%) appointment, subject to renewal. This position is open until filled. For more information about the position, including required qualifications and application materials, please visit: https://aprecruit.berkeley.edu/JPF02079.

If you have questions about the position, please contact academicpositions@law.berkeley.edu.

The University of California is an Equal Opportunity/Affirmative Action Employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability, age or protected veteran status. For the complete University of California nondiscrimination and affirmative action policy see:
http://policy.ucop.edu/doc/4000376/NondiscrimAffirmAct.

CNBC: Here’s who Biden would likely pick as the top financial watchdog for consumers

Here. 

Texas A&M Journal of Property Law CFP for consumer law symposium

We received the following CFP:

Texas A&M Journal of Property Law: Spring Symposium Proposal

Purpose:

The Texas A&M Journal of Property Law is currently seeking speakers and papers for its 2021 virtual Spring Symposium.  The purpose of the Symposium is to create a vibrant and useful forum for consumer law scholars, practitioners, and interested students to gather and exchange ideas.  The Symposium will likely take place via Zoom in mid-March or April, depending on speaker availability. 

Topics Under Consideration:

The Texas A&M Journal of Property Law is interested in broadly exploring recent changes and concerns in consumer law including consumer credit and debt practices, regulatory rollbacks by the Consumer Financial Bureau, consumer bankruptcy proceedings, credit reporting, data security, mortgage lending practices, and student-loan forgiveness.  In addition, the Symposium welcomes discussion over the recent decision by the Uniform Law Commission to address debt collection efforts by third-party debt collectors or buyers based on default judgments.  These topics are non-exhaustive, and the Texas A&M Journal of Property Law welcomes additional topics for consideration.

Speaker Selection:

            Interested scholars and practitioners must submit their interest in the Symposium, proposed topic idea, and current affiliations with law firms, universities, or non-government advocacy organizations to editorinchief@gmail.com by January 8, 2021.  Scholars and practitioners interested in publishing papers should express their willingness to do so and the paper’s intended subject-matter in the email.  Willingness to contribute an article for publication by the Texas A&M Journal of Property Law will be a factor for speaker selection. 

Further Information:

The Journal of Property Law will select speakers and papers for publication by February 12, 2021.  Selected papers are due after the Symposium on June 4, 2021. 

Matt Bruckner article on the roles of the states in protecting student loan borrowers from misbehaving schools

Matthew A. Bruckner of Howard has written The Forgotten Stewards of Higher Education Quality, 11 U.C. Irvine L. Rev. 1 - 41 (2020). Here's the abstract:

A “triad” of regulators is supposed to ensure that student loan borrowers are not harmed by low-value institutions of higher education, including exploitative profiteers operating fly-by-night or predatory institutions of higher education. The triad has failed. Millions of students have borrowed billions of federal student loan dollars that they won’t ever repay, causing borrowers to suffer needless economic harm and psychological anguish. But these harms were, are, and remain mostly preventable. This Article appears to be the first law review article to consider the states’ role in policing institutional quality and ensuring that student borrowers are not preyed upon by low-value institutions of higher education. It suggests concrete steps states could take, such as adopting a state version of financial responsibility scores, the gainful employment rule, or a cohort default rate metric, to avoid being characterized as the forgotten stewards of higher education quality.

Virginia Search Warrant Seeking to Identify Peaceful Protestors

by Paul Alan Levy

Yesterday, we filed a motion to quash a search warrant seeking to obtain from Facebook the confidential files of an activist group that has been protesting the refusal of Virginia authorities to step in to protect the health of immigration detainees in a private prison in Farmville, Virginia.  The motion builds on successful work three years ago along with the ACLU in opposing the Trump Administration’s attempt to raid online files of a group that ran protests at his inauguration. The ACLU's argument back then was based on the Fourth Amendment, influenced by the First Amendment; our briefs were based entirely on the First Amendment right to speak anonymously.

Steiger Consumer Law Fellowships that pays law students $6,000 for summer work now accepting applications

Here's the announcement:

In its seventeenth year, the Janet D. Steiger Fellowship Project offers paid summer clerkships for law students to work on consumer protection issues in the offices of State Attorneys General across the country.

The Janet D. Steiger Fellowship Project provides law students the extraordinary opportunity to work in the consumer protection departments of state and territorial Offices of Attorneys General and other consumer protection agencies, including the National Association of Attorneys General and the Attorney General’s Office of the District of Columbia, throughout the United States. The eight to ten-week paid Fellowships were initiated in 2004 by the ABA Antitrust Law Section, in cooperation with the National Association of Attorneys General, as a consumer protection outreach initiative to introduce law students to the rewards of legal careers in public service. A total of 425 Steiger Fellowships have been awarded through the summer of 2020.

The law students who have served as Steiger Fellows have characterized their experiences as truly rewarding, often well beyond their expectations. A number of students have said that for the first time they are considering law careers in public service, and several have already entered public service upon graduation.

Each of the highly motivated Steiger Fellows provides tangible, meaningful assistance to states, territories and other consumer protection agencies that are in substantial need of additional resources to fulfill their consumer protection mission. Offices that have hosted Steiger Fellows in the past have characterized the Fellows’ work as exemplary and have often described the students as some of the most talented interns the offices have ever attracted.

The Council of the Section approved funding for states and other entities to participate in the 2021 Steiger Fellowship Project.  Each selected student will receive a $6,000 stipend (subject to certain federal taxes and administered through the offices of the various consumer protection agencies). This Project continues to be a tribute to the memory of the late Janet D. Steiger, one of America’s great public servants who, during her remarkable tenure as FTC Chairman, dramatically improved cooperation, communication and coordination between state and federal consumer protection and antitrust enforcement agencies.

The locations that will receive Steiger Fellows during the summer of 2021 are:

• ^Arizona | *Arkansas | %Colorado | *Connecticut | * Delaware | *District of Columbia |%Florida |*Georgia | ^Hawaii | %Illinois | %Indiana |%Iowa | *Kansas | %Maryland | %Massachusetts |%Minnesota | % Mississippi | % Montana | % National Association of Attorneys General | * Nebraska | *Nevada | %$ New Hampshire | %New Jersey |  %New York | *Pennsylvania | *~Puerto Rico | % Rhode Island | %South Dakota | *South Carolina | %Tennessee | *Texas | *Utah | ^Vermont | ^Virginia | ^Washington | ^West Virigina | %Wisconsin |  %#Wyoming
  
  Note:    ^8 Week Term of Service           %10 Week Term of Service        *No Term of Service Preference                ~ Fluency in Spanish Required         #1L Candidates Only $2L Candidates Only

Applications and more available here.

(H?T: Leslie Fair)