Consumer Law & Policy Blog

Defending the right to be funny

by Paul Alan Levy

Late last year, Harrison Greenbaum, a New York comedian and magician, included Christopher Nicholas Sarantakos, better known in the magician trade as Criss Angel, who is, apparently, a very well known magic act, in an annual satirical review that he offers of major figures in the magic trade. A particular point of this performance was a restaurant that Sarantakos opened in a rural area outside Las Vegas called Criss Angel Breakfast Lunch and Pizza, or CABLP. Greenbaum put together a parody of the restaurant’s menu, and put the menu online for the performance, using the domain name CABLPRestaurant.com, which was still available for purchase because Sarantakos, quite logically, chose some much shorter domain names (eatblp.com and cablp.com) which could much more easily be typed into a browser.

Angel was neither honored to have been included in the satirical hall of honor, nor amused by the jokes. He hired a lawyer in New York to send Greenbaum a demand letter asserting that the parody menu infringes his copyright and his trademark, and that the domain name infringes his trademark, and threatening both to sue for damages and to invoke the Uniform Domain-Name Dispute-Resolution Policy (“UDRP”) to seize the domain name. Hoping to achieve a prompt resolution, Greenbaum’s initial reaction was to offer to give up the domain name, but at that point Sarantakos got greedy, demanding both a confidentiality clause as well as a commitment that Greenbaum would never again display the parody menu.

Diversity at the Federal Reserve is related to lending practices

Read Board Diversity Matters: An Empirical Assessment of Community Lending at Federal Reserve by profs Brian Feinstein, Peter Conti-Brown, and Kaleb Nygaard. Here is the abstract:

This working paper shows that the increased presence of minority directors on the twelve regional Federal Reserve Banks — the quasi-governmental entities responsible for evaluating many commercial banks’ lending to underserved communities — is associated with greater lending to these communities. To assess this relationship, we leverage original data on the demographic characteristics of Reserve Bank boards of directors and exploit three unusual features of the U.S. financial regulatory system. First, that some Reserve Districts bifurcate states allows for comparisons of lending postures for commercial banks subject to identical state banking regulations — and, for geographically proximate banks on either side of the line, substantially similar economic conditions — but different Federal Reserve Bank supervisors. Second, that Federal Reserve Banks evaluate some commercial banks’ community lending and other federal regulators evaluate this activity at other commercial banks within the same geographic region presents another comparison group. Third, a 2010 statutory change that reduced some directors’ roles in Reserve Bank governance enables analysis of the extent to which director diversity is correlated with community lending before and after this legal change that presumably tempered some directors’ power over regulated commercial banks but left other directors’ authority unaffected.

Empirical analyses based on all three identification strategies show consistent evidence that racial diversity on Reserve Bank boards is associated with Fed-regulated banks’ increased lending to underserved groups. That diversity can be consequential even where, as with the Fed, the connection between the organization’s leadership and policy outcomes is attenuated encourages greater scholarly attention to the influence of diversity on outcomes in other public- and private-sector contexts.

Student loan lawyer Joshua Cohen video explaining the Navient student loan settlement

Here.

Navient required to cancel $1.7 billion in student loans

CNBC reports that Navient, one of the largest student loan servicers, will cancel $1.7 billion in private student loans under a settlement with 39 states. The settlement, announced yesterday, resulted from accusations the lender gave out loans to millions of borrowers who would be unlikely to be able to repay them. The article is here.

NACA essay argues that consumer statutory damages set decades ago should be increased because of inflation

Here. Excerpt:

Since the 70’s, the FCRA has allowed consumers with credit reporting claims to recover up to $1,000 per statutory violation of the law, while the FDCPA allows statutory damages up to $1000 per case even when multiple violations of the law are present. It is decades-past time for an update.

An annual inflation rate of 6.2%, a 31-year high, has been enough to spark panicked headlines and heavy debate among policymakers, but the effects of the 351% cumulative rate of inflation on FDCPA statutory damages also have been consequential but less discussed.

Ninth Circuit says BMW can't force arbitration based on arbitration clause in purchase agreement between the consumer and the car dealership

Here's the first paragraph of yesterday's decision in Ngo v. BMW North America

In 2012, Kim Ngo bought a new BMW 535i sedan from Peter Pan Motors, Inc, a car dealership. Because the dealership financed Ngo’s purchase, they entered into a purchase agreement which contained an arbitration clause. As a result of alleged defects with the car, Ngo sued BMW of North America, LLC (“BMW”), the manufacturer, which was not a signatory to the purchase agreement. The question presented to us is whether BMW may compel arbitration under the purchase agreement between Ngo and the dealership. We conclude that it cannot, and we reverse the district court’s order compelling arbitration.

Following CFPB report, BofA to cut overrdraft fees

Bank of America has announced that, in February, it will cut the fees it charges customers for overdrawing their checking accounts and, starting in May, will eliminate non-sufficient funds fees.

CNN reports that other banks, such as Capitol One and Ally, have also cut fees.

The federal government has been encouraging banks to waive these fees to provide relief to consumers experiencing severe financial strain during the pandemic. Last month, the Consumer Financial Protection Bureau called out JPMorgan Chase, Bank of America, and Wells Fargo for being the top collectors of overdraft fees, reporting that the three banks together brought in 44 percent of the total reported that year by the large banks.

Paper on Removing Barriers to Mortgage Credit for Black Homebuyers

Michelle Aronowitz and Vanessa Gail Perry of George Washington have written Homeward Bound: Removing Barriers to Mortgage Credit for Black Homebuyers. Here's the abstract:

We analyze some of the key barriers to Black homeownership and propose several solutions that promise to expand homeownership opportunities, lower the costs of homeownership, and hasten equity accumulation for Black households. These barriers are centered in the secondary market.

We analyze disparities between Black and White prospective and recent homebuyers, the fair housing obligations of the GSEs and their regulators, the GSEs’ statutory mission as directed by their federal charters (their Duty to Serve), and then proceed to identify three barriers to be addressed immediately, and some suggestions to improve the impact of Fannie Mae and Freddie Mac high LTV affordable loan programs. Based on these findings and analysis, we provide a set of specific action items and policy priorities for the industry and regulators.

In summary, we recommend that the Enterprises and their regulators:

Increase monitoring and enforcement of fair housing requirements;

Establish goals for expanding lending to borrowers with high LTVs, high DTIs, and/or non-traditional credit histories;

Adopt credit scoring models that look outside existing credit repository data;

Eliminate credit score and DTI credit overlays;

For loan purchases, eliminate loan-level pricing adjustments based on borrower characteristics; Develop more robust and equitable alternatives to conventional high LTV “affordable” loan programs.

Suit accuses "New York" Jets and Giants of false advertising because they play in NJ instead of for claim that they are professional football teams

by Jeff Sovern

Story here. The joke is courtesy of my brother-in-law, Ray Conley.

Supreme Court to consider forced-arbitration issues in two cases

In December, the Supreme Court granted the petition in Viking River Cruises v. Moriana, which poses the question whether the Federal Arbitration Act requires state courts to enforce a waiver of a statutory right of action to collect penalties on behalf of a state, in violation of neutral principles of state law prohibiting such a waiver, if the waiver is set forth in an arbitration agreement. Over at the Balls and Strikes blog, Adam Cohen discusses a case in a post called The Supreme Court Is Poised to Give Kajillionaire Corporations Another Free Pass. (Note: Public Citizen is co-counsel for the respondent in the case and does not share his pessimism.)

Earlier in the fall, the Court granted for review another case presenting an issue about arbitration: Morgan v. Sundance, Inc. The question in that case is whether a party opposing a motion to compel arbitration is required to show prejudice to prove that the other party waived its right to arbitrate.

Both cases will be argued this spring and decided before the Court's term ends in late June.