Consumer Law & Policy Blog

Meirav Furth's important article: Retail Race Discrimination

Meirav Furth of UCLA and Tel-Aviv University has written Retail Race Discrimination. Here's the abstract:

This Article investigates everyday race discrimination while shopping in clothing stores of different price ranges. It reports on an original field experiment which examines the combined effects of race and gender on consumers’ shopping experiences and outcomes. Nineteen testers—Black and white females and males, were recruited and trained to return pre-purchased, unworn clothing items (without receipts) to approximately sixty retail stores in Chicago. Overall, more than 200 audits were conducted and analyzed in this study. The findings show that, controlling for all other variables, Black customers receive worse treatment in retail stores than do comparable white customers seeking to return identical goods, and that Black females are particularly vulnerable to discrimination. Implications for law and policy are discussed.

I think this is a very important article and I hope the findings lead to changes in the law.

John Oliver tackles consumer privacy

Or click here.

Lawyer who created use of arbitration clauses to prevent class actions doesn't read consumer contracts

by Jeff Sovern

Probably my favorite podcast is Ballard Spahr's Consumer Finance Monitor Podcast. I learn a tremendous amount from it. Yes, it favors the industry view, as it is certainly entitled to do, but many episodes are devoted to interviewing consumer advocates as well. If you don't listen to it, and you like this blog, you are missing out.

Which brings me to the latest episode, titled "Has America’s civil justice system crashed? A conversation with special guests and consumer advocates Harvey Rosenfield, President of the Consumer Education Foundation, and Laura Antonini, Policy Director of #REPRESENT."  About eleven minutes into that episode, Alan Kaplinsky, a leading industry lawyer, and the person credited with inventing the strategy of using arbitration clauses to prevent class actions says: "I acknowledge that very few people actually read [consumer contracts]. I know I don't read contracts that I sign or become subject to." I suppose this shouldn't be a surprise given that consumer law professors often don't read consumer contracts and that other legal luminaries, like Chief Justice Roberts and Hillary Clinton have said they don't read fine print. But given that the Supreme Court has said arbitration is a matter of consent, it is hard to reconcile the fact that not even the industry lawyers read these things with the idea that everyone nevertheless consents to them. Courts often impose a duty to read but when we will accept--and act upon--the reality that this is a duty practically no one ever lives up to? 

"We don't talk about claims rates," in case you don't want to talk about something besides Bruno

Here, from the Edelson firm. Or click below

 

Do Copyright Holders Get a Free Pass to Identify Alleged Infringers?

by Paul Alan Levy

Suppose that, on June 4, 2022 the owner of a China-based Twitter account were to post this 2005 photo of the Gate  of Heavenly Peace, with text calling for remembrance of the martyrs of Tiananmen Square.

 

Suppose further that, the following week, a previously unknown company based in China and claiming ownership of the copyright in the 2005 version of the iconic painting of Mao’s bust that sits over the main entrance to the Gate  (a new version is hung annually), or falsely claiming copyright in the photo, were to issue a DMCA takedown to Twitter, followed by a subpoena demanding to know the identity of the account holder, claiming that the information is needed to enforce that copyright. Would Twitter be legally obligated to hand over the name of the account holder without delay, knowing that the likely result could be an all-expenses paid trip for the Twitter user to a re-education camp in Xinjiang?

That is what Big Copyright, represented by the Copyright Alliance and by a coalition of trade associations of professional photographers, argues in a pair of amicus briefs that they have filed in the controversy over Twitter postings by CallMeMoneyBags. The case presents the latest challenge in the Northern District of California to the well established rule, first established in 2001 in Dendrite International v. Doe, previously followed in that district as well as in federal and state courts across the country, that a would-be plaintiff claiming that its rights have been violated by anonymous online speech has to make a showing, supported by both legal argument and an evidentiary showing, that it has a tenable claim before it gets to identify the anonymous speaker and thus obtain the ability to serve the speaker with a summons and complaint and litigate its claim to a conclusion, and that assuming the plaintiff has made these showings, the court has to balance the right to enforce substantial claims through litigation against the prospective costs of breaching the right to speak anonymously.

The Facts of the Case

The case arises in somewhat peculiar circumstances. Over a period of a few days in October 2020, a Twitter user using the handle “CallMeMoneyBags,” who specialized in tweets about private equity figures, posted a series of photographs of nubile women to which he appended texts suggesting that Brian Sheth, a private equity billionaire, was now investing his wealth in such women (the tweets and photos appear at pages 3 to 5 here). A mysterious entity named Bayside Advisory, LLC, which appears to have been first formed in Delaware that same month, and was not even registered to do business in California until January 2021, served a DMCA takedown notice on Twitter, contending that the tweets infringed its copyright in the photos, and followed that notice with a subpoena that it obtained under section 512(h) of the DMCA, seeking to identify CallMeMoneyBags for the claimed purpose of enforcing its copyright.

Matt Reed proposal: Cancel interest on student loans

by Jeff Sovern

Here. That's consistent with Elizabeth Warren's position that the government shouldn't make money on student loans. I wonder what incentives it would create. 

Job posting: CLASS Network Director

We have been asked to post the following:

CLASS Network Director 

 

Do you want to work every day to advance the rights of low-income consumers? Do you want to lead a national network of law school programs dedicated to building racial and economic justice?

 

Well, then, perhaps this is the job for you.

 

The UC Berkeley Center for Consumer Law & Economic Justice seeks a director for the CLASS Network, a new consortium dedicated to promoting racial and economic justice programs in law schools around the United States and beyond. The CLASS (Consumer Law Advocates, Scholars, & Students) Network works to increase the number of relevant courses offered at law schools, to develop and foster new clinics and student organizations, and to offer the chance for law students and faculty around the country to come together on shared projects like amicus briefs in high-profile cases and filings in significant regulatory proceedings.

 

A partnership between the UC Berkeley Center and the National Association of Consumer Advocates (NACA), the CLASS Network also hosts the Economic Justice Law Students Summit – the only national conference for students interested in consumer protection law and economic justice. 

 

So, if you want to

 

• create something new
• be part of a national effort to work with law students and faculty to increase racial and economic justice
• work on major cases with students and practitioners from around the nation
• work at Berkeley Law
• help train and inspire the next generation of economic justice lawyers and advocates, in partnership with the National Association of Consumer Advocates, and
• travel the country

 

you might want to send in your resume.

 

The Director will also be involved with the full range of the Center’s other activities, from arranging conferences to delivering presentations and testimony to spurring the development of consumer protection law across the country and around the world.

 

Application Procedure - Please visit this link to apply: https://aprecruit.berkeley.edu/JPF03304

FTC sues Intuit, alleges TurboTax “free” filing ads are deceptive

According to a Federal Trade Commission press release, the FTC "is taking action against Intuit Inc., the maker of the popular TurboTax tax filing software, by issuing an administrative complaint against the company for deceiving consumers with bogus advertisements pitching “free” tax filing that millions of consumers could not use. In addition, to prevent ongoing harm to consumers rushing to file their taxes, the Commission also filed a federal district court complaint asking a court to order Intuit to halt its deceptive advertising immediately.

"The Commission alleges that the company’s ubiquitous advertisements touting their supposedly “free” products—some of which have consisted almost entirely of the word “free” spoken repeatedly—mislead consumers into believing that they can file their taxes for free with TurboTax. In fact, most tax filers can’t use the company’s “free” service because it is not available to millions of taxpayers, such as those who get a 1099 form for work in the gig economy, or those who earn farm income. In 2020, for example, approximately two-thirds of tax filers could not use TurboTax’s free product."

The press release is here.

The CFPB should lower the amount credit card issuers can charge for late fees

by Jeff Sovern

The CFPB has lately been up in arms over credit card late fees. Late fees and many other fees are troubling because it is likely that consumers don't think about them when choosing their credit cards. Classical economics presupposes that consumers will make optimal decisions if they know what prices they will pay, but if consumer ignore late fees, lenders can charge more for those fees and make excessive profits from them. To be sure, the late fee disclosure appears in the Schumer Box, the disclosure required for credit card solicitations, but probably many credit card applicants focus on other terms, like the APR and annual fee. Consumers may ignore the late fee because, perhaps blinded by the optimism bias, they anticipate making all their payments on time and also because they can consider only so much information at a time when making decisions. Then they miss a payment and get zapped by the late fee that they overlooked.

Because the market doesn't protect consumers from excessive late fees, Congress decided to step in. It enacted the Credit CARD Act, which provides that late fees have to be "reasonable and proportional to such omission or violation." Congress also authorized the CFPB, in consultation with other financial regulators, to issue a regulation providing a safe harbor late fee.  Late fees at or below that amount  are presumptively reasonable and proportional. Under the CFPB regulation implementing that section, as adjusted for inflation, card issuers can charge a late fee of up to $30 for the first late payment and $41 for subsequent late payments within the next half dozen billing cycles.

But that number now seems higher than it should be. According to a recent CFPB report, nearly all large credit card issuers charge the maximum late fee, but many smaller issuers charge late fees. That suggests that $30 is more than needed for an issuer to cover its costs and make a reasonable profit when consumers make late payments. Indeed, the most common late fee charge is only $25. The Bureau Report also notes that some credit card issuers, including Citibank, offer cards with no late fees. All this implies that larger issuers other than Citibank are using late fees as a profit source in a way that smaller lenders are not. If smaller issuers find $25 sufficient, then why is it reasonable for larger issuers--who are likely to be the most efficient in their operations--to charge larger amounts?  Consequently, the Bureau could reduce the existing ceiling and still have it be reasonable. I think it should.

According to a recent Roll Call article by Steven Harras, Experts debate if CFPB credit card late fees report presages rule changes (I can't find a link but it's available on WestLaw), Ballard Spahr's Alan Kaplinsky thinks that CFPB Director Rohit Chopra will not act on this and is only jawboning. "I don't think he is a fan of rulemaking," Kaplinsky said of Chopra. "It takes too long for him." [Disclosure: the article also reports my prediction that the Bureau will adjust the ceiling] Jawboning may work in the short term with some issuers but it isn't sufficient for the long term and is unlikely to persuade all credit card issuers. When Director Chopra leaves the Bureau, his successors may not find this matter salient. Credit card issuers may then raise their late fees to the maximum allowed. And it isn't a sufficient answer that credit card issuers will compete by offering lower late fees. As noted above, Congress has already rejected that position for good reason. In sum, the Bureau should move to amend the regulation to lower the late fee safe harbor numbers.