Consumer Law & Policy Blog

CFPB Spring Regulatory Agenda is up and arbitration isn't on it

by Jeff Sovern

As the American Banker's Kate Berry reported (behind a paywall but available on Lexis), the CFPB's Spring Regulatory Agenda has been posted to the OMB's web site, rather than, as has been the Bureau's practice, the CFPB web site. Here it is:

Agency	Agenda Stage of Rulemaking	Title	RIN
CFPB	Prerule Stage	Consumer Access to Financial Records	3170-AA78
CFPB	Proposed Rule Stage	Amendments to FIRREA Concerning Automated Valuation Models	3170-AA57
CFPB	Proposed Rule Stage	Property Assessed Clean Energy Financing	3170-AA84
CFPB	Final Rule Stage	Small Business Lending Data Collection Under the Equal Credit Opportunity Act	3170-AA09
CFPB	Final Rule Stage	Adverse Information in Cases of Human Trafficking Under the Debt Bondage Repair Act	3170-AB12

Nothing on arbitration or payday lending. While the regs on the list are all important, so far it looks as if Director Rohit Chopra will make much of his mark in ways other than by promulgating regulations. That means many of his initiatives may not last much longer than his service as director.

CFP: CFPB consumer finance research conference

The submission deadline is August 22 and the conference is December 15-16. More here.

My Daughter’s @Delta Disaster Story: The Last Chapter (I hope)

by Jeff Sovern

When last we left our intrepid adventurer’s story, she had arrived home, even if her bag had not. But one week after her original flight to Atlanta, she received a text from Delta indicating that her bag was about to be delivered—to the hotel she had left four days before. While she was trying to reach Delta, the bag was left in the hotel lobby without anyone speaking to the hotel staff to explain why it had been brought there. You would think an airline would understand that when someone flies somewhere and stays in a hotel, they may not still be there a week later. Indeed, Delta should have known she was no longer at the hotel because they had flown her to Detroit, and eventually back to New York. To make matters worse, my daughter had replaced most of the items in the bag during its week-long absence and so now was facing the possibility of having bought many of the same items twice and not receiving full compensation from Delta, which had, after all, returned the bag, albeit to a place where my daughter no longer was.

Fortunately, my daughter’s friend was driving from Atlanta to New York and brought the bag to her yesterday, two weeks after the original flight. My daughter eagerly opened the suitcase to discover that her shoes and underwear were missing. The missing underwear is creepy. But not to worry: someone else’s clothing and shoes had mysteriously replaced them and were sandwiched in with my daughter’s remaining clothing!

Sadly, this chapter ends with another Delta cliffhanger. My son was scheduled to fly back from Detroit this afternoon on Delta. Naturally he learned this morning that his flight had been cancelled. Delta found him a later flight, which has in turn been delayed. The good news: he won’t check a bag.

Mystery company fails to identify Twitter critic who used “its” photos

by Paul Alan Levy

Judge Vincent Chabbria ruled that an anonymous Twitter user using the pseudonym “Mr. Money Bags” could not be identified pursuant to a DMCA subpoena, both because her display of copyrighted photographs to taunt a venture capitalist for allegedly spending money on the company of nubile young women was fair use, and because, in any event, applying the well-known Dendrite standard,the Twitter user’s First Amendment right to speak anonymously outweighs the mysterious copyright owner’s possible interest in pursuing judicial remedies for the alleged infringement.  His  opinion joins several other recent decisions refusing to recognize a broad "copyright exception" to the Dendrite standard.

Judge Chhabria Agrees That Standard Dendrite Analysis Applies

The case had aroused substantial interest, and amicus involvement from Public Citizen as well as from EFF and ACLU of Northern California, because Bayside Advisory, the owner of the copyright in the photographs, argued, with avid amicus support from copyright owners’ trade associations, that the First Amendment right to speak anonymously could not be invoked to oppose a DMCA subpoena, or, at the very most, that a highly permissive standard (the “Sony Music” standard)  for identifying alleged infringers in cases involving the misuse of peer-to-peer software to obtain and disseminate copyrighted musical recordings and movies was the right one for assessing DMCA subpoena cases.

Judge Chhabria cursorily rejected these contentions, holding simply that Dendrite is the governing standard without even mentioning Sony Music as an alternate approach. He elaborated only that, to the extent that Bayside was arguing that the text of the DMCA precluded any invocation of the First Amendment as limiting enforcement of a subpoena sought in furtherance of an alleged copyright claim, that raised serious First Amendment concerns that militated against such a construction of the statute. He also squarely rejected Bayside’s argument that a platform hosting allegedly infringing content lacks either standing or statutory power to assert the First Amendment or fair use rights of its users.

Senators ask FTC to protect communities of color from discriminatory online practices

Seven Democratic and Democratic-caucusing senators sent a letter to the Federal Trade Commission on Wednesday calling on it to use its authority to protect communities of color and immigrant communities in the United States from discriminatory online practices, biometric surveillance, consumer predation, and anti-competitive behavior. The letter focuses on the impact of facial recognition and location data collection technologies.

The letter is here.

NCLC releases 50-state survey on predatory lending laws

From NCLC's press release:

"A new report from the National Consumer Law Center finds progress toward a 36% APR cap for common short-term and longer-term loans in some states. In states that allow high-cost loans, exorbitant interest rates can trap borrowers in a cycle of debt. Two states – New Mexico and North Dakota – enacted new laws that dramatically reduce the APRs and fees allowed for a $500 six-month and $2,000 two-year installment loan. On the other hand, several states went in the opposite direction, allowing predatory loans to carry even higher APRs."

The report, titled, Predatory Installment in the States, includes maps and tables for annual percentage rate caps in every state and the District of Columbia, tracks installment loan changes in the states since mid-2021, and provides recommendations for states to protect residents from predatory high-cost lending. 

Osofsky & Thomas paper on the relationship between implicit bias and the home mortgage interest deduction

Leigh Osofsky and Kathleen DeLaney Thomas, both of North Carolina, have written Implicit Legislative Bias: The Case of the Mortgage Interest Deduction, 56 UC Davis Law Review (2022). Here is the abstract:

The home mortgage interest deduction is over 100 years old. The deduction has been subject to increasing and, at times, withering criticism from commentators. Scholars have argued that the mortgage interest deduction may be a particularly ineffective and regressive way to subsidize homeownership. Other scholars have made the important point that the mortgage interest deduction has a disparate racial impact: homeowners are disproportionately white, so the deduction disproportionately benefits white people at the expense of people of color. Yet, the mortgage interest deduction has retained remarkable and costly staying power despite all the critiques.

How has the mortgage interest deduction persisted over a century, despite extensive critique? We argue that an underappreciated part of the story of the mortgage interest deduction is how its very creation arose out of implicit racial bias and other cognitive biases. First, scholars and policymakers ignored the racialized history of homeownership in the United States and relied on racist tropes in studying the potential economic benefits of the deduction. After such associations occurred, policymakers misattributed to homeownership benefits that were really, at least in part, benefits that flowed from whiteness. Perceiving positive benefits from homeownership, legislators viewed it as a good worth subsidizing through the tax system. Cognitive biases such as confirmation bias then made it unlikely that, once in place, the mortgage interest deduction would be substantially changed.

This understanding of the mortgage interest deduction should upset any future attempts to characterize the deduction as a neutral, albeit flawed, way to subsidize desirable values. More generally, this case study illustrates a phenomenon that merits more attention in the legal literature: how implicit racial bias and other cognitive biases in the legislative process make flawed legislation, like the mortgage interest deduction, more likely to be made and more difficult to upend. We conclude by offering suggestions for minimizing bias in future legislation and for reforming existing legal policy that already reflects such bias.

CFPB requests information regarding relationship banking and customer service

The Consumer Financial Protection Bureau is seeking public input on how bank customers can assert their rights to better customer service with big banks. A 2010 federal law specifies that consumers have rights to obtain timely responses to requests for information about their accounts from large depository institutions. In a Request for Information issued this week, the CFPB seeks data about, and consumer experiences with, the obstacles that may prevent people from receiving high standards of customer service and high-quality human interactions with their banks or credit unions. More information is here.

My Daughter’s @Delta Disaster Part 2

by Jeff Sovern

When last we left my daughter, she was in Atlanta, bagless, and Delta was clueless about where it was. On Sunday, she returned to the Atlanta airport for her return flight. Fortunately, checking in went faster than for her departure flight because she didn’t have a bag to check! She cleared security, only to learn that her flight home to LaGuardia had been cancelled. She desperately sought an alternate flight. Finally, a Delta employee found her a flight to Detroit. From there, she could get on a plane to the White Plains airport, and from there she could take a Lyft home, arriving home at 2 a.m., about five hours later than her originally-planned return. 

By the time her flight arrived in Detroit, she had only minutes to make it to the connecting flight. She ran to the gate, only to discover that the flight was overbooked by some twenty people. Delta offered people compensation to surrender their seats and postpone their flight until the next day, and finally my daughter got a seat. Of course, the fight was delayed by computer glitches. Meanwhile, the flight was still overbooked and so Delta kept raising its offer. Finally, my daughter decided that arriving the next day with compensation beat arriving home in the middle of the night. She took the offer, only to be stuck in the airport until 2 a.m. anyway while Delta attended to the logistics of booking her hotel room and flight back. She spent the rest of the night at an oddly-smelling airport motel, got on a flight the next afternoon (which was, naturally, overbooked and delayed by an hour), and arrived back at her home the following evening.  

Her bag remains lost, and she still hasn’t received the promised compensation, despite spending nearly an hour on the phone yesterday trying unsuccessfully to get it. Maybe they put it in her suitcase. But at least she no longer has to fly Delta. Until, of course the next time she flies a route that only Delta serves. Ah, the benefits of an oligopoly.  

My daughter's Delta Airlines disaster: what happened to her suitcase? @Delta

by Jeff Sovern

Thursday night, my daughter waved goodbye to her suitcase at LaGuardia as she flew to Atlanta for a wedding. She arrived in Atlanta at 10:30 pm, but her bag was a no show. She optimistically, but as it happened, pointlessly, stayed at the airport until 1:00 am at the advice of Delta employees, searching for the bag. The following morning she called Delta, spent almost an hour on hold, and was finally told the bag had been scanned into the airport on Friday! She raced to the airport, but in fact the person on the phone had misled her and the bag was not there. Now she faced her own private Mission Impossible: the wedding was only three hours away and Delta had wasted still more of the time she could have used to replace her wedding attire. She zoomed to a mall and made it to the wedding, but sadly missed the vows. Meanwhile, her bag is still missing, as of Saturday morning.

Even children of consumer law professors have consumer law problems. Even if they no longer have a suitcase.