Senate Banking Committee hearing on nomination of Rohit Chopra to lead CFPB tomorrow, Tuesday, at 10 Eastern

by Jeff Sovern

You should be able to listen here. The American Banker's Kate Berry has a story here, behind a paywall, unfortunately, but if you have Lexis, you can read it there. Excerpt:

[Chopra's] aggressive past statements coupled with the power and high profile that comes with the CFPB job could lead to some pointed questions from GOP lawmakers at his hearing, and potential opposition from some members on the Senate floor. Democrats hold a razor thin majority, with Vice President Kamala Harris casting a tiebreaking vote.

Some critics may bristle at Chopra’s use of more inflammatory language about business malfeasance than the tone set by Kraninger.

To some observers, Chopra is reminiscent of former CFPB Director Richard Cordray, who issued press releases creating headline risk for large public companies. Chopra’s chief of staff at the FTC, Jen Howard, had been the CFPB’s assistant communications director under Cordray. If Chopra is confirmed, she is expected to become the CFPB’s chief of staff, sources said.

“He will be at least as aggressive as former Director Cordray, if not more so,” said Lucy Morris, a partner at Hudson Cook and a former CFPB deputy enforcement director who worked with Chopra in the CFPB’s early years. “His statements are very hard-hitting and the language is quite charged.”

His public comments and tweets provide a road map for how he would govern as the nation’s top cop for enforcing consumer financial laws.

“He has a very lengthy consumer protection record,” said Linda Jun, senior policy counsel at the Americans for Financial Reform Education Fund. “He believes in meaningful accountability. When people are harmed and companies break the law, he thinks there needs to be consequences.”

Ballard Spahr held a very informative webinar about what to expect from Chopra, with guest Richard Cordray. If you missed the webinar, you can listen to the last two episodes of their Consumer Financial Monitor Podcast, which recycled much, if not all, of the webinar's content. The Ballard podcast is one of my favorites consumer law podcasts, by the way.

Loyola of Chicago Consumer Law Review Symposium: Racial Justice in Consumer Law

Panel I - Antiracist Policy in Consumer Law - March 4, 4:00 PM (All times are CST.)

The symposium's first panel will highlight antiracist policy arising in the various areas of consumer law. The panelists' expertise and discussion topics range from historical analysis of racist consumer facing practices to modern analyses of consumer protection most needing antiracist interventions.

Deseriee Kennedy - Professor of Law, Tuoro Law Center
Andrea Freeman - Professor of Law, University of Hawaii
Odette Williamson - Staff Attorney, NCLC

Panel II - Racial Inequity In Lending Practices - March 5, 9:00 AM

The symposium's second panel will tackle how wide-ranging treatments of loan recipients can be depending on the race of the applicant. A blend of professors, authors, practitioners, and journalists, the panel all analyze this issue through different lenses to provide a thorough analysis.

Winnie Taylor - Professor of Law, Brooklyn Law School
Ted Janger - Professor of Law, Brooklyn Law School
Chris Willis - Partner, Ballard Spahr
Bob Sullivan - Author, Journalist

Panel III - The Government's Role on Consumer Protection - March 5, 10:40 AM

The symposium's final panel analyzes what role the government plays in protecting consumers in the areas of housing, healthcare, and business. The panel consists of two professors researching these topics as well as representatives from two organizations working closely and In tandem with the government for consumer protection.

John Yinger - Professor of Economics, Syracuse University
Anne-Marie Hakstian - Professor of Business, Salem State University
Daniel Threet - Research Analyst, NLIHC
Morgan Williams - General Counsel, NFHA

Keynote Address - March 5, 12:00 PM
Kwame Raoul - Attorney General, State of Illinois

Contact LUC.CLRsymposium@gmail.com with any questions.
Registration link for Thursday available here.
Registration link for Friday available here.
Up to 3.5 Hours of CLE credit available. 

CFPB and VA, MA, and NY challenge predatory immigrant-services scam

The Consumer Financial Protection Bureau, Virginia, Massachusetts, and New York today sued a company called Libre by Nexus, Inc. and its owners for a predatory immigrant-services scam that traps victims into paying expensive, long-term fees. The complaint alleges that Libre preys on immigrants, primarily Hispanics, who speak little or no English and are being held in federal detention centers, by offering to pay their immigration bonds to secure their release. In exchange, the complaint says, Libre demands large upfront fees and hefty monthly payments while concealing or misrepresenting the true costs of its services.

The complaint is here.

Consumer scams run wild during pandemic

Consumer journalist David Lazarus of the LA Times has written We’re living in a golden age of scams as fraud reports surge amid pandemic. He notes that "[i]t’s been clear for months that the COVID-19 pandemic has been a once-in-a-lifetime opportunity for scammers, con artists and assorted slimeballs looking to cash in on this most miserable of moments in our lives." Lazurus points to a new Federal Trade Commission report showing how bad things have gotten. Lazarus goes on to highlight the types of scams that are most prominent and what consumers can do to prevent or mitigate financial harm.

Paul Weiss: The Coming Transformation of the CFPB in the Biden Administration: What to Expect and How to Prepare

Here. Excerpt (footnotes omitted):

As then-Professor Elena Kagan explained in her famous article, “Presidential Administration,” it is the overriding tendency of recent presidents to harness executive agencies’ rulemaking and other authorities and use them as extensions of their own policy and political agendas. Given the CFPB’s broad authorities, its ample funding through the Federal Reserve, and the extent of consumer hardship during the pandemic, it would not be surprising if President Biden fully weaponizes the CFPB in the service of his agenda. * * *

As a result, a Chopra-led CFPB that is part of the Biden Administration will likely aggressively deploy the agency’s rulemaking, supervisory, enforcement, and other authorities to address the financial challenges faced by consumers during the pandemic, boost fair-lending enforcement and seek greater penalties and remedies across the range of enforcement activity, and renew or initiate more assertive approaches to regulating payday lending, student loans, credit reporting, and other sectors.

The essay also discusses numerous areas to watch.

(H/T: Norm Silber)

Cox & Engel paper critiques federal student loan program

Minnesota's Prentiss Cox and Suffolk's Kathleen C. Engel have written Student Loan Reform: Rights Under the Law, Incentives Under Contract, and Mission Failure Under ED, Harvard Journal on Legislation, Forthcoming. Here's the abstract: 

The federal student loan program is a disaster. Over five million people are in default even though Congress provides all borrowers with the right to affordable payments and to discharge of borrowers’ debts in specific circumstances. Many student loan borrowers who could benefit from these rights are unaware they exist or are unable to exercise their rights.

This Article examines the dynamics and incentives that drive the longstanding problem of high default rates and repayment distress among student loan borrowers. Our core finding is that the Education Department adopts a creditors-rights framework for student loan repayment, which is inapposite for student loans because borrowers have unique, federal rights that are unavailable in market credit transactions. We then demonstrate why the mission and track record of the Education Department, including its failure to manage and oversee servicers, make it unlikely that the Department would ever adopt a borrower-rights focus on student loan repayment.

We build the case for the creation of the Student Borrower Protection Agency, modeled in part on the Consumer Financial Protection Bureau (CFPB). The function of the SBPA would be to serve student loan borrowers. Just as the country needed the CFPB to fill regulatory gaps in consumer financial protection, we need an agency that will deliver to student loan borrowers the rights promised under federal law.

 

Busy week for the FTC

Last week was a busy one for the Federal Trade Commission. Among other things:

 

FTC Acts to Ban Payday Lender From Industry, Forgive Illegal Debt

 

Four Defendants Settle with the FTC for Their Alleged Role in Credit Card Laundering Scheme

 

FTC Sends More than $1.7 Million in Refunds to People who Lost Money to Student Loan Debt Relief Scam

 

Publisher Will Pay More Than $2 Million to Settle FTC Charges That It Targeted Seniors with Phony Diabetes Cure and Money Making Schemes

 

In time for Valentine's Day, FTC data show massive increase in romance scams

More consumers than ever report falling prey to romance scammers, according to new Federal Trade Commission data that show consumers reported losing a record $304 million to the scams last year. A newly released data spotlight shows that the amount consumers reported losing to romance scammers is up about 50 percent since 2019, and has increased more than four-fold since 2016.

The FTC's press statement is here.

When consumers chime in anonymously on a dispute between a business and one of its customers

by Paul Alan Levy

Our latest case about the right to speak anonymously is in federal court in Chicago, flowing from a dispute between a prominent vlogger named Cristina Villegas and a plastic surgeon named David Shifrin who, Villegas complained, “botched my nose job.” Villegas posted a 23-minute-long  YouTube video which recounts the inadequacies that she perceived in the doctor’s work; toward the end, she says that, hoping to forestall a public airing of her complaints, he offered to refund her entire surgery fee (in the high four figures) if she would refrain from talking about the issue. She proclaimed that it was more important to get to tell her story.

Villegas’ Instagram account has nearly 500,000 followers, and her YouTube channel has more than 1,600,000 followers; as of today, her “botched nose job” video has had over four million views. Shifrin has taken no action to prevent her from telling her story directly; he has not, for example, sued Villegas claiming that she made any false statements of fact in her vlog. You would think that, if Villegas has been less than accurate in her portrayal of Shifrin’s work on her nose, it was Villegas with her millions of followers who inflicted real harm on his business. Presumably, though, Shifrin recognized that Villegas’ vlogging business is substantial enough that she can probably afford to defend herself.

Instead, he has apparently tried to salvage his reputation by going after what might have been a weak link: members of the public who, incensed by what they saw in the vlog, took to Google and Yelp to side with Villegas and denouncing Dr. Shifrin. Because both Google and Yelp ask reviewers to recount their own personal experiences with businesses, those companies began to remove the reviews or, at least to downgrade them to “not-recommended” status. But that was not enough to satisfy Shifrin, who filed suit in state court against 78 such reviewers, charging them with violation of the federal Computer Fraud and Abuse Act ("CFAA") and a variety of state-law torts, all of which amount to defamation.

Study finds companies treated lower-income and African-American consumers who complained to CFPB complaint database differently during Trump era

Charlotte Haendler and Rawley Heimer, both of Boston College's Department of Finance, have written The Financial Restitution Gap in Consumer Finance: Insights from Complaints Filed with the CFPB. Here's the abstract:

Consumers seek restitution for disputed financial services by filing complaints with the Consumer Financial Protection Bureau (CFPB). We find that filings from low-socioeconomic (i.e., low-income and African American) zip codes were 30% less likely to be resolved with the consumer receiving financial restitution. At the same time, low- and high-socioeconomic zip codes submitted an equal share of the CFPB complaints. The socioeconomic gap in financial restitution was scarcely present under the Obama administration, but grew substantially under the Trump administration. We attribute the change in financial restitution under different political regimes to companies anticipating a more industry-friendly CFPB, as well as to the more industry-friendly leadership of the CFPB achieving less financial restitution for low-socioeconomic filers. The financial restitution gap cannot be explained by differences in product usage nor the quality of complaints, which we measure using textual analysis.