Consumer Law & Policy Blog

Consumer Reports: Guide to returning gifts

Consumer Reports has this guide to retailers with the best and worst return policies.

FTC initiates rulemaking to combat spike in impersonation fraud

The Federal Trade Commission has launched a "rulemaking aimed at combatting government and business impersonation fraud, a pernicious and prevalent problem that has grown worse during the pandemic. Impersonators use all methods of communication to trick their targets into trusting that they are the government or an established business and then trade on this trust to steal their identity or money."

According to the FTC press release: "The COVID-19 pandemic has spurred a sharp spike in impersonation fraud, as scammers capitalize on confusion and concerns around shifts in the economy stemming from the pandemic. Incorporating new data from the Social Security Administration, reported costs have increased an alarming 85 percent year-over year, with $2 billion in total losses between October 2020 and September 2021. Notably, since the pandemic began, COVID-specific scam reports have included 12,491 complaints of government impersonation and 8,794 complaints of business impersonation."

FTC settlement bans phantom-debt collectors from industry

From a Federal Trade Commission press release:

A group of phantom debt collectors will be permanently banned from the debt collection industry and required to surrender the contents of numerous bank and investment accounts under the terms of a settlement with the Federal Trade Commission.

The FTC’s complaint against South Carolina-based National Landmark Logistics, filed in July 2020, alleged that the defendants in the case used robocalls to leave deceptive messages claiming consumers faced imminent legal action—lawsuits or even arrest—for unpaid debts.

When consumers returned the calls, the defendants falsely claimed to be from a mediation or law firm, again threatened legal action, and used consumers’ personal information to convince consumers the threats were real. The defendants turned around and pocketed the money, despite the fact that in many instances, consumers did not owe the debt being collected on or the defendants had no right to collect it.

Under the terms of the settlement, National Landmark Logistics, LLC; National Landmark Service of United Recovery, LLC; Silverlake Landmark Recovery Group, LLC; and Jean Cellent will be permanently banned from debt collection of any kind. They will also be banned from buying or selling debt, and from making any misrepresentations to consumers about any goods or services—including from claiming that they are lawyers or represent a law firm.

The settlement also includes a monetary judgment of $12,098,760, which is partially suspended due to an inability to pay. In addition, the defendants will be required to surrender the contents of numerous bank and investment accounts, as well as the title to property located in Philadelphia and a Mercedes SL 550 or the cash value of those assets.

If the defendants are found to have misrepresented their financial status, the full amount of the monetary judgment would become immediately due.

CFPB opens inquiry into “Buy Now, Pay Later” credit

The Consumer Financial Protection Bureau has issued a series of orders to five companies offering “buy now, pay later” credit. The orders to collect information on the risks and benefits of these fast-growing loans went to Affirm, Afterpay, Klarna, PayPal, and Zip. The CFPB explained that it is concerned about accumulating debt, regulatory arbitrage, and data harvesting in a consumer credit market already quickly changing with technology.

In a press release, the CFPB described "Buy now, pay later" credit as "a type of deferred payment option that generally allows the consumer to split a purchase into smaller installments, typically four or less, often with a down payment of 25 percent due at checkout. The application process is quick, involving relatively little information from the consumer, and the product often comes with no interest. Lenders have touted BNPL as a safer alternative to credit card debt, along with its ability to serve consumers with scant or subprime credit histories." The agency noted that "[m]erchants are adopting BNPL programs and are willing to typically pay 3 percent to 6 percent of the purchase price to the companies, similar to credit card interchange fees, because consumers often buy more and spend more with BNPL. Indeed, BNPL’s use has spiked during the COVID-19 pandemic and throughout the holiday shopping season."

The agency also published a blog post for consumers: Know before you buy (now, pay later) this holiday season.

CFPB report on violation of consumer-protection law in 2021

The Consumer Financial Protection Bureau has issued a report on wide-ranging violations of law in 2021. The report covers violations in areas including mortgage servicing, fair lending, payday, and remittances.

A press release with a link to the report is here.

Judge Issues "Gag Order" Forbidding Disclosure of "Confidential Information" in Records Mistakenly Disclosed under New Jersey's Open Public Records Act

I first posted about this case about early last month.

In releasing documents electronically pursuant to a public records request, a local government body in New Jersey made a rookie error: using software (presumably Word) to perform redactions in a manner that was easily undone when the requester opened the provided PDF documents using his own device. The documents revealed some settlement discussions between the government body and a local developer who was trying to put up a building in local wetlands, as well as a sleazy effort to avoid disclosure by proceeding ex parte to secure confidentiality from a local judge who was hearing a lawsuit about the development controversy. In response to a motion not served on the counsel for the requester, a known opponent, the judge gave her advance blessings to confidentiality under the Public Records Act.

Block-LIeb & Janger article proposes changes in unconscionability rules

Susan Block-Lieb of Fordham and Edward J. Janger of Brooklyn have written Fit for its Ordinary Purpose: Implied Warranties and Common Law Duties for Consumer Finance Contracts, 59 Houston Law Review 3 (2021). Here's the abstract:

The history of consumer goods and consumer credit markets presents an anomaly: market transactions for consumer goods and credit transactions evolved in tandem from face to face and bespoke to standardized and widely distributed; the law governing these “product” markets has not. With consumer goods, the Uniform Commercial Code codifies implied warranties of merchantability and fitness for a particular purpose, and the common law of tort provides strict liability for defective products. With consumer finance contracts, borrowers enjoy scant common law protection. And yet both consumer goods and consumer contracts may be dangerously defective “products.”

This Article reconsiders the traditional, all-or-nothing choice between tort and contract law to govern injury from different sorts of consumer products. It argues for a symmetric treatment of defective consumer goods and consumer financial products, one accomplished by turning to the tort-like doctrines in the common law of contract: the doctrines of unconscionability; good faith; and warranty. The terms of an adhesive financial contract should be interpreted in light of an implied warranty that the contract-as-product is as described. The defense of unconscionability should be strengthened to enable enhanced scrutiny of terms that fundamentally undermine contractual products. Its procedural prong should be satisfied by the adhesive nature of the terms, without additional proof of the circumstances of a consumer’s surprise about the contents of the contract. The substantive prong should be informed by implied obligations of good faith and the implication that this contract-as-product is fit for ordinary and particular purposes – that it is faithful to the underlying transaction. Attempts by lenders to disclaim implied warranties or obligations of good faith should be viewed as prima facie unconscionable.

In this way, the law governing consumer-contracts-as-products would serve the same function as the product liability and warranty laws that govern consumer-goods-as-products. Reconciliation of these laws would ensure that financial contracts are fit for their ordinary purposes as loans.

Blasie on Plain Language Laws

Michael Blasie of Pennsylvania State University, Dickinson Law has written The Rise of Plain Language Laws, University of Miami Law Review, 2022 Forthcoming. Here is the abstract:

When lawmakers enacted 778 plain language laws across the United States, no one noticed. Apart from a handful, these laws went untracked and unstudied. Without study, large questions remain about these laws’ effects and utility, and about how they inform the adoption or rejection of plain language.

This Article creates a conceptual framework for plain language laws to set the stage for future empirical research and normative discussions on the value of plain language. It unveils the first nationwide empirical survey of plain language laws to reveal their locations, coverages, and standards. In doing so, the Article creates a systematic method to find these laws. Then it coins categories and terminology to describe their coverage and standards, thus creating a timely launchpad for future scholarship on domestic and international plain language laws. Along the way, the Article exposes the previously unknown scope of these laws—from election ballots and insurance contracts to veterans housing and consumer contracts to regulatory drafting and governor reports. That scope underscores the pervasive influence of plain language across public and private sectors, and over lawyers and non-lawyers alike. More, the survey reveals significant intrastate and interstate variations and trends in coverages and standards. With this knowledge, for the first-time empirical research can more precisely measure the benefits and costs of plain language laws while controlling for variables. Plus, the Article sets the stage for a forthcoming series of normative assessments on the role and design of plain language laws. Ultimately, the Article reignites a lively discourse on plain language amongst lawmakers, practitioners, and academics.