Mulvaney dismisses members of CFPB advisory board

Consumer Financial Protection Bureau's Mick Mulvaney has dismissed the members of the agency’s Consumer Advisory Board. The CFPB's Policy Associate Director for External Affairs informed board members of the decision on a conference call Wednesday. The members were told that their terms were terminated and they were not permitted to reapply.

Politico has the story.

Fitbit Lawyer Admits Admits No Rational Consumer Would Arbitrate $162 Claim

by Jeff Sovern

So Allison Frankel reports for Reuters in a story headlined Fitbit lawyers reveal ‘ugly truth’ about arbitration, judge threatens contempt. Here are the first three paragraphs:

At a hearing Thursday in San Francisco federal court, a lawyer for the fitness tracking company Fitbit told U.S. District Judge James Donato that no rational customer would arbitrate a $162 claim against the company. The filing fee for a proceeding before the American Arbitration Association, said William Stern of Morrison & Foerster, is $750 - and that’s just to get the case started. It simply doesn’t make sense, Stern said no fewer than six times at Thursday’s hearing, to arbitrate a $162 claim.

Fitbit’s terms of service require customers to arbitrate their claims.

Quite simply, this is a Catch-22 for Fitbit customers. Fitbit imposes mandatory arbitration because it doesn’t want people who buy its fitness trackers to band together in a class action that would make their small claims economically viable. But Fitbit knows consumers, for the most part, won’t throw good money after bad to arbitrate their relatively small claims – and the company doesn’t want to lay out its money for small-dollar arbitration either.

This isn't the first time an industry lawyer has admitted that arbitration claims don't make sense or suppress claims.  See here  and here for other examples.

(HT: Gregory Gauthier)

"CFPB to Resume Private Consumer Data Collection"

The Wall Street Journal reports that Mick Mulvaney at the Consumer Financial Protection Bureau will lift the freeze on the CFPB’s collection of private consumer data, which helps its examiners oversee financial institutions.

The full article is here.

CFPB asks court to stay its payday rule

In April, payday lenders sued the Consumer Financial Protection Bureau over the payday lending regulation -- a rule that provides borrowers with various protections to avoid the cycle of debt too-often associated with payday lending. Yesterday, in a joint filing, the CFPB and the payday lenders together asked the court to stay the litigation while the CFPB "reconsiders" the rule.

At the same time, they also asked the court to stay the compliance dates of the rule until the litigation ends.

To sum up, the CFPB and the payday group want the court to stay the litigation indefinitely and then stay the rule until the litigation ends -- that is, indefinitely.

Without discussing the "equities," the short motion says that the "balance of the equities" favors an indefinite stay. It is a lazy motion that doesn't pretend to address the standard for the requested stay of the rule, telling the court to ask if it wants an explanation.

Another reminder that the Consumer Financial Protection Bureau is no longer a consumer protection bureau.

The short motion is here.

Paper on Advertising's Short-Term Effects

Chen He of the Tilburg Law and Economics Center and Tobias J. Klein of the Tilburg University Department of Econometrics & Operations Research, Center for Economic Research, Law and Economics Center; IZA Institute of Labor Economics; and Netspar, have written Advertising as a Reminder: Evidence from the Dutch State Lottery. Here is the abstract:

We use high frequency data on TV and radio advertising together with data on online sales for lottery tickets to measure the short run effects of advertising. We find them to be strong and to last for up to about 4 hours. They are the bigger the less time there is until the draw. We develop the argument that this finding is consistent with the idea that advertisements remind consumers to buy a ticket and that consumers value this. Then, we point out that in terms of timing the interests of the firm and the consumers are aligned: consumers wish to be reminded in a way that makes them most likely to consider buying a lottery ticket. We present direct evidence that this does not only affect the timing of purchases, but leads to market expansion. Then, we develop a tractable dynamic structural model of consumer behavior, estimate the parameters of this model and simulate the effects of a number of counterfactual dynamic advertising strategies. We find that relative to the actual schedule it would be valued by the consumers and profitable for the firm to spread advertising less over time and move it to the last days before the draw.

2019 International Association of Consumer Law (IACL) Conference to be in Indiana next June

We received the following announcement:

The next conference of the International Association of Consumer Law (IACL) will be held at the Indiana University McKinney School of Law in Indianapolis on June 13-15, 2019. This is the first time that the conference will be held in the United States, and we are hoping to get a good turnout from consumer law teachers and scholars in North America. You can expect a call for papers and more information about the conference (including hotel reservations) sometime in August or September of this year. If you have any questions, you can contact Professor James Nehf and his colleagues at Indiana University, jnehf@iupui.edu. The organizers are looking forward to another successful event to follow the meeting in Porto Alegre in July 2017. (For more information about the IACL, see http://www.iacl.net.au/ .  The organization also has a presence on Facebook).

"Lowe’s Is Making Managers Sign Arbitration Agreements If They Want Their Bonuses"

"Salaried managers and assistant managers at the big-box home improvement retailer are being required to enter binding arbitration agreements under the threat of losing their valuable bonuses, according to a copy of the contract obtained by HuffPost.By signing the contract, managers agree they won’t take Lowe’s to court with any claims or join in class-action lawsuits against the company."

The full article is here.

Amusing Video (though the laugh is on us): Adam Ruins Everything on Car Dealerships

 

Or click here.

Court holds Department of Education violated Privacy Act rights of Corinthian students

AP reports that a federal court in California has ruled that the Education Department violated privacy laws with regard to students defrauded by the Corinthian for-profit college chain.

"In a break with Obama administration policy, Education Secretary Betsy DeVos announced in December that some students cheated by the now-defunct schools would only get a part of their federal student loan forgiven. In order to determine how much to forgive, the agency analyzes average earnings of graduates from similar programs.

"But a California district court ruled late Friday that the department’s use of Social Security Administration data in order to calculate loan forgiveness violates the Privacy Act. The court ordered that the Education Department stop the practice and stop debt collection from these students.

"The court also said that it needs to hear more from the agency and plaintiffs in the class-action suit in order to decide whether or not to compel the agency to return to full loan forgiveness. A hearing is scheduled for June 4."

The full article is here.

A credit-file freeze with the big-three credit reporting companies may not be enough protection

Susan Grant at the Consumer Federation of America has written A Credit Reporting Agency You Probably Never Heard Of. Here's a key excerpt:

If you have placed freezes on your credit files at Experian, Equifax and TransUnion, no one can fraudulently open a new account pretending to be you, right? Not exactly. Freezing your files at the “big three” credit reporting agencies goes a long way to protecting you from identity fraud, since most major retailers and lenders check them when consumers apply for credit. ... But not everyone checks consumers’ credit files at the “big three.” Many phone companies, for instance, rely on information about new account applicants from the National Consumer Telecommunications and Utilities Exchange (NCTUE). ... Some gas, electric, water and cable companies also use the information from NCTUE in their approval process for new accounts. If you want to prevent someone from using your personal information to get phone or utility services, you need to freeze your file at the NCTUE. ... Should you bother to do any of this? Well, according to the Federal Trade Commission’s latest statistics on fraud and identity theft, phone or utilities fraud was the third most common type of identity theft reported to the agency last year.