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.

 

 

Neil Sobol asks for your help in updating the survey of law school consumer law offerings

Guest post from Neil Sobol:

Howdy consumer law colleagues:

This posting requests information to help update my survey on consumer laws offerings in law school. In an August 2020 blog,  I forwarded a chart created by my research assistant. The chart was part of a project to update the consumer law offerings chart reported in Jeff Sovern's post in 2019. It was based on my assistant's review of the websites of  201 ABA-accredited law schools. The latest version of the chart is available here. It is intended to reflect for each listed school: (1) "consumer-related classes," which refers to courses that historically contain consumer law topics, (2) "consumer-specific classes," which refers to course offerings that have "consumer" in their names, and (3) consumer law clinical/experiential opportunities.

Because some course information is likely outdated on schools' websites, I request your help. Please send any corrections or comments to nsobol@law.tamu.edu so that I can update the chart. Any input is greatly appreciated.

I intend to present the updated information at the Teaching Consumer Law Conference in Santa Fe in May 2022. Hope to see you there!

Professor Neil Sobol, Texas A&M School of Law

Forbes: Biden's budget does not include money for cancelling student loans

Here. It doesn't mean there won't be targeted loan forgiveness or changes in the IDR program, but so far, it looks as if widespread cancellation (e.g., $50,000 per borrower is not something the president is pushing).

David Dayen's profile of Rohit Chopra in The American Prospect: "Washington's Best Hope"

Here. Dayen paints Chopra as someone who finds ways to get positive things done through hard work and imaginative use of agency powers. How does the industry react to this? Here is one paragraph:

Financial firms didn’t want to see anyone rousing the machinery of the federal government, and they groused about Chopra to anyone and everyone. In a recently uncovered email from 2015, Kevin Modany, then the CEO of ITT Tech, told his lawyers that Chopra was an “economic terrorist” and that he “should be sent to Guantanamo Bay for about a decade of R&R; which should include an aggressive regimen of ‘water sports’!”

Consumer Reports: "I Agreed to What? The Surprising Rights Companies Claim in Terms of Service"

Consumer Reports writes that consumers may "be surprised by some of the clauses in terms of service and end-user license agreements .... A number of them are odd but relatively harmless. [A zombies clause?] In other cases, these agreements try to take away important consumer rights." The article is here.

Lauren Henry Scholz article argues for private claims to enforce privacy rights

Lauren Henry Scholz of Florida State has written Private Rights of Action in Privacy Law, William & Mary Law Review, Forthcoming. Here's the abstract:

Many privacy advocates assume that the key to providing individuals with more privacy protection is strengthening the power government has to directly sanction actors that hurt the privacy interests of citizens. This Article contests the conventional wisdom, arguing that private rights of action are essential for privacy regulation. First, I show how private rights of action make privacy law regime more effective in general. Private rights of action are the most direct regulatory access point to the private sphere. They leverage private expertise and knowledge, create accountability through discovery, and have expressive value in creating privacy-protective norms. Then to illustrate the general principle, I provide examples of how private rights of actions can improve privacy regulation in a suite of key modern privacy problems. We cannot afford to leave private rights of action out of privacy reform.

2021 HMDA data on mortgage lending now available

The Home Mortgage Disclosure Act Modified Loan Application Register data for 2021 are now available on the Federal Financial Institutions Examination Council’s HMDA Platform for approximately 4,316 HMDA filers. The published data contain loan-level information filed by financial institutions, modified to protect consumer privacy.