CFPB Announces Debt Collection Field Hearing July 28; Sneak Peak at the New Rules?

Here.  The Bureau is likely to announce the Small Business Regulatory Fairness Enforcement Act (SBREFA) proceeding that day, which will entail giving some information about what its proposed debt collection rules are likely to look like.

American Banker Story: Pence's Statements on the CFPB and Other Banking Issues

The story is headlined Pence VP Pick Could Shape Trump's Banking Policy (free content).  Here is what the article says about Pence's view of the CFPB:

When the Consumer Financial Protection Bureau was just a legislative proposal, Pence objected to giving a new agency so much power; he would likely support efforts to reform the structure of the agency. Republicans have been pushing to replace the bureau's single director with a five-person commission and to require that the bureau consider credit availability as well as consumer protection.

"The bill allows bureaucrats to determine the types and terms of credit products offered to consumers, through the establishment of the so-called Consumer Financial Protection Agency," Pence said in the speech to the New York Hedge Fund Roundtable.

"An unelected 'credit czar' would be empowered to dictate what financial products could be offered and at what terms, drastically reducing the number of financial products available and driving up the cost of credit generally, at a time when families and small businesses can least afford it," Pence added. "Agencies need the ability to consider safety and soundness and consumer protection together to ensure that a balance is achieved and neither responsibility is neglected."

CFPB Orders Santander Bank to Pay $10 Million Fine for Illegal Overdraft Practices

The Consumer Financial Protection Bureau announced yesterday that it has ordered Santander Bank, N.A. to pay a $10 million fine for illegal overdraft service practices.

Santander’s telemarketing vendor deceptively marketed the overdraft service and signed certain bank customers up for the service without their consent. In addition to paying the civil money penalty to the CFPB, Santander Bank must go back and give consumers the opportunity to provide their affirmative consent to overdraft service, not use a vendor to telemarket its overdraft service, and it must increase oversight of vendors it uses to telemarket consumer financial products or services.

“Santander tricked consumers into signing up for an overdraft service they didn’t want and charged them fees,” said CFPB Director Richard Cordray. “Santander’s telemarketer used deceptive sales pitches to mislead customers into enrolling in overdraft service. We will put a stop to any such unlawful practices that harm consumers.”

Santander is a national bank based in Wilmington, Del. Santander Bank operates a network of nearly 700 retail branch offices in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island.

The CFPB's full press release is here.

Congress passes GMO-labeling bill

The Hill reports on the new federal GMO-labeling bill, which has drawn praise and criticism.

A bill to create a federal labeling standard for foods with genetically modified ingredients and block states from issuing their own laws sailed through the House on Thursday.

The bill, which passed by a 306 to 117 vote, directs the U.S. Department of Agriculture to create a national labeling standard that allows food producers to choose how they want to disclose the presence of genetically modified ingredients.

Under the legislation, manufacturers will be able to use text, symbols or a QR code that consumers must scan with a smartphone to relay the information.

The bill passed the Senate last week and now heads to President Obama's desk.

Democrats slammed the measure, calling it anti-consumer. Critics say the bill will roll back tougher state standards and deny consumers information on their foods.

The Hill's story is here.

New air travel law called "an amazing win for consumers"

The Washington Post reports:

After months of debate over the Federal Aviation Administration reauthorization bill, and at an apparent impasse over privatizing air traffic control, Congress has settled on a compromise — with some unexpected benefits for the average air traveler.

The House and Senate have agreed on an extension that would fund the agency at current levels through September 2017. Among other things, it would also require airlines to seat families with children together without charging them more, accelerate the security screening process and issue prompt refunds for baggage fees when luggage is lost for more than 12 hours.

The legislation surprised consumer advocates, who had expected a far less ambitious extension bill.

The Post's full story is here.

"Road Seems Dark to You? New Tests Blame Your Headlights"

Of the dozens of vehicles — small S.U.V.s and midsize cars — whose headlights the Insurance Institute for Highway Safety has tested this year, only one has been rated “good.” That was a 2016 Toyota Prius V. The best any others could muster was merely “acceptable,’’ and many fared much worse. There’s at least one reason for the shortcomings. The federal standard for headlights became effective in 1968. Some revisions have been made, but the actual testing procedure has not changed much. And despite decades of improvement in lighting technology since then, the government still tests headlamps only in a laboratory setting, not in actual cars on dark, winding roads. Nor does the federal standard specify how far the headlights must illuminate the path ahead. Hoping to shame the auto industry to do better, the insurance group is setting a de facto safety standard for carmakers to meet.

The New York Times has the story.

Australian Financier's Abuse of Trademark Law to Suppress a Critical Blog: A Perpetual Problem in the N.D. Cal.

by Paul Alan Levy

There is somebody on the other side of the Pacific Ocean who has a strongly negative perspective on Nicholas Assef, the head honcho at an Australian financial services firm called Lincoln Crowne – or at least, somebody held such views nine years ago.   We know at least that much because, in 2007, an anonymous individual created a small Google blog, using the URL lincolncrowne.blogspot.com, and posted a “warning” urging people who were considering doing business with  Assef and his company to do their due diligence first.  And even though the blog is buried deep in the Google search results for someone entering a search using lincoln crowne as the search string (currently, it is on the tenth page of results), Assef is plainly rankled by this criticism.  We know that first of all because seven years later, after Google refused to take down the blog, Lincoln Crowne sued Google for defamation in Australia (which lacks the US protection for online hosts that section 230 affords).  Google initially responded to the lawsuit by taking down the blog, but later restored the blog to its DOT.COM domain.  It is not clear to me whether Lincoln Crowne ever pursued the suit against Google to judgment.  The company’s papers do not make reference to any judgment, so I assume there was none.

We have a sense of how upset Assef must be because last year, Lincoln Crowne and its principal filed a lawsuit against the anonymous blogger in the Northern District of California, claiming both defamation and trademark infringement.  They are represented by Mitchell Silberberg, a large law firm whose services do not come cheap (this hyperlink is to a years-old fee application by Marc Mayer, the more senior of Assef's lawyers in this case).

The Apparent Flaws in Plaintiffs’ Lawsuit

The trademark claim is based on the proposition that use of the company name in the third-level domain for the blog constitutes infringement.  The complaint asks the court to exercise supplemental jurisdiction over the defamation claim, which is based on the allegation that everything written in the blog is a lie (does that include “and” and “the”?).  The defamation claim is a bit odd because the statute of limitations for defamation is only one year, and the suit was filed eight years after publication.  And the trademark claim is even worse – the blog is simple criticism, without selling any rival products. and there is a Ninth Circuit decision on point: Bosley Medical v. Kremer (a case that I handled), saying that non-commercial gripe sites are outside the scope of the Lanham Act.  And even if the site had some commercial aspect, what likelihood of confusion about source could be caused by a blog that is headlined  BEWARE LINCOLN CROWNE & COMPANY and then “Warning Warning Warning - Nick Assef"?.  It was only a few years ago that Charles Carreon was hit with a Lanham Act  attorney fee award in the Northern District of California for his litigation against Christopher Recouvreur over the use of Carreon’s name as the domain name of a satirical blog about Carreon. 

Traffic safety laws improve safety

Data compiled by the Auto Insurance Center shows that in states with tougher driving laws, fewer motorists die in auto accidents. Comparing speed limits, teen driving restrictions, and seat belt laws in the states, the Auto Insurance Center found a direct relationship between tougher laws and fewer deaths.

To explore whether states with stricter laws experience better safety outcomes, the Auto Insurance Center compared each state’s laws with the latest data from the National Highway Traffic Safety Administration’s Fatality Analysis Reporting System (FARS).

The results, in a reader friendly format, are here. A Washington Post story on the findings is here.

The National Financial Capability Study and Student Debt Ignorance

by Jeff Sovern

Allison posted yesterday about the National Financial Capability Study.  GW Business School professor Annamarie Lusardi has a  Wall Street Journal essay titled So Much Student Debt, So Much Ignorance, about what the Study, which she co-authored, shows about student debt. An excerpt:

The latest NFCS data find that about one-in-five loan holders do not know the terms of their student loans. For example, they can’t say whether their monthly payments are determined by their income. And the majority (54%) of borrowers did not calculate their monthly payments when they took out their most recent loan.

Her remedy is to increase financial literacy education. Personally, I'm skeptical about whether that would work.

Senate Democrats press regulators to prevent another Trump U

The Washington Post reports today:

Sen. Elizabeth Warren (D-Mass.) and other Senate Democrats are calling on federal regulators to step up efforts to protect consumers from educational programs that engage in fraud and deceptive marketing, in light of the ongoing case against Trump University.

In a letter sent Wednesday to the heads of the Federal Trade Commission, Department of Veterans Affairs, Consumer Financial Protection Bureau and Education Department, the lawmakers urge the agencies to create an online tool that alerts and warns potential students of companies posing as universities without a state license, charter or accreditation. They also asked the agencies to “enhance and prioritize” enforcement of federal consumer-protection laws that prohibit deceptive practices by businesses or “individuals who lend their names to sham outfits.” The senators are seeking a response by the end of August.

The full story is here.