NYT on driver's license suspensions and cycles of debt

We've discussed before how minor infractions, when combined with a person's inability to pay, court fees, and predatory practices of private probation companies, can ruin someone's life. (See, for instance, here and here.)

In today's New York Times, read this story about how the loss of a driver's license -- one consequence of falling down the minor-infraction rabbit-hole -- can be particularly devastating (a subject we've also touched on before, here). Here's the NYT link.

CFPB, Navajo Nation sue to end tax scheme targeting low-income consumers

The Consumer Financial Protection Bureau and the Navajo Nation yesterday filed suit to shut down a tax-refund scam that allegedly preyed on tribe members in New Mexico by prodding them into high-cost tax-refund-anticipation loans. Consumerist has the story.

Expose on predatory mobile home company owned by Warren Buffett

A joint investigation by the Center for Public Integrity and the Seattle Times reveals troubling practices by Clayton Homes, owned by Warren Buffett’s Berkshire Hathaway.

Clayton, which operates under various names, is the nation’s biggest homebuilder, according to the report, which describes Clayton's practices thus: “Clayton relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance.”  Some other practices unearthed in the investigation: “loan terms that changed abruptly after [customers] paid deposits or prepared land for their new homes; surprise fees tacked on to loans; and pressure to take on excessive payments based on false promises that they could later refinance”; additionally, Clayton loans average 7% higher rates than typical loans.

Read the whole story here. Relatedly, Allison noted earlier today that President Obama has threatened to veto two bills weakening Dodd-Frank reforms, including Dodd-Frank protections for borrowers taking out loans for mobile homes.

DOJ's Consumer Protection Branch at work

Below are recent announcements from the Department of Justice's Consumer Protection Branch.

April 13, 2015 Quality Egg, Company Owner and Top Executive Sentenced in Connection with Distribution of Adulterated Eggs

April 13, 2015 California Man Sentenced to Prison for Odometer Fraud Scheme

April 10, 2015 First Jamaican Man Extradited to the United States in Connection with International Lottery Scheme Pleads Guilty

April 3, 2015 Massachusetts Dairy Farm Agrees to Permanent Injunction for Improper Medication Practices

March 30, 2015 District Court Enters Permanent Injunction against Los Angeles Seafood Company and Senior Officers to Stop Distribution of Adulterated Products

March 16, 2015 Car Salesman Sentenced to Prison for Odometer Fraud Scheme

March 12, 2015 Justice Department Announces Settlement with California Bank for Knowingly Facilitating Consumer Fraud

March 11, 2015 District Court Enters Permanent Injunction Against Texas Pharmacy and Senior Executives to Prevent Distribution of Adulterated and Misbranded Drugs

March 10, 2015 CommerceWest Bank Admits Bank Secrecy Act Violation and Reaches $4.9 Million Settlement with Justice Department

March 10, 2015 McNeil-PPC Inc. Pleads Guilty in Connection with Adulterated Infants' and Children's Over-the-Counter Liquid Drugs

March 4, 2015 Seven Individuals Indicted in Multimillion-Dollar Business Opportunity Fraud Scam

Obama threatens to veto bills that would weaken Dodd-Frank reforms

AP, via The Washington Post, reports that President Obama is threatening to veto two bills that, he says, would undermine the Dodd-Frank financial reforms. "One of the bills would exempt some borrowing fees from an existing law aimed at protecting consumers. The second bill would undo a provision in Dodd-Frank that categorized some loans for mobile homes as high-cost, triggering additional protections to make sure borrowers can afford them."

The full (but short) article is here.

Connecticut legislature moves toward protecting residents from exorbitant payday loans

Connecticut law caps interest rates at 12%. But Great Plains Lending, affiliated with a Native American tribe in Oklahoma, is hawking payday loans by web and mail with rates of 200-400%, according to WTNH.com, reporting from Hartford, Conn. In response, the Connecticut legislature is crafting legislation to prevent residents from being held liable for more than 12%.

This appears to be a promising response to the problem of "rent-a-tribe" payday loans, where lenders operate on tribal land in an effort to avoid state rate caps. If states can't regulate lenders because of tribal sovereignty, they can at least limit what their own residents must pay.

The story is here.

John Oliver on a cigarette company's international bullying

This clip from a recent Last Week Tonight is both funny and topical (though lengthy, at 18 minutes). John Oliver reveals not only the lengths to which Philip Morris will go to oppose anti-smoking regulations worldwide but also the potentially devastating effect of international trade deals on government safety regulation (a subject we most recently discussed here in connection with the Trans-Pacific Partnership negotiations).

Here’s the John Oliver clip. Enjoy and share.

Federal Education & Literacy Commission observing National Financial Capability Month

You can find some useful basic financial advice at mymoney.gov, here.

Among its offerings (check out the right-hand column):

-Spending and Spending Plans

-How to Obtain Your Free Credit Report (from the FTC)

-Help Your Children Grow Their Money Skills (from the CFPB)

There are also “Money Quizzes” which are mainly lists of suggested individual financial good practices presented in question form. (E.g., “Do you shop around for interest rates?”)

Conflicts of interest weaken FDA regulation of dietary supplements

The New York Times today has an editorial on regulation of dietary supplements and industry capture of the agency. The editorial begins:

The Food and Drug Administration’s lethargic regulation of dietary supplements containing a dangerous stimulant described in recent reports in The Times is a classic example of what happens when industry representatives infiltrate the agency that is supposed to regulate them. The worrisome ingredient is BMPEA, a chemical nearly identical to amphetamine that is added to weight-loss and workout products in an effort to enhance their effect. Whether it does so is unclear, since there have never been tests of its effectiveness and safety in humans.

After describing the revolving door through which industry insiders come and go from key FDA positions, the editorial concludes:

[C]onsumer advocates are surely right that putting the industry in charge of supplement regulation is like appointing the fox to guard the henhouse. Clearly, the F.D.A. should not allow industry insiders to fill key positions.

Read "Conflicts of Interest at the FDA" in full, here.

Joanna Schwartz Paper on Whether Class Actions Coerce Settlements

Joanna C. Schwartz of UCLA has written The Cost of Suing Business, forthcoming in the DePaul Law Review. Here's the abstract:

To listen to the Chamber of Commerce, one would think that class actions are the most significant scourge on business ever conjured up by man. In brief after brief to the Supreme Court, the Chamber of Commerce and other business amici tell the same story: Meritless class actions, filed by rapacious plaintiffs’ attorneys for the ostensible benefit of consumers, employees, and shareholders, are so devastatingly expensive to defend against, and threaten such financial ruin if plaintiffs prevail, that corporate defendants cannot help but accept “blackmail settlements” that harm both businesses’ bottom lines and society at large. In this Essay for the 2015 Clifford Symposium, I examine the empirical support for these claims about the deleterious effects of class actions.

Although there is very little reliable empirical information about any aspect of modern civil litigation, at least some available information challenges business amici's assertions about the costs and burdens of class action suits.  Class actions, as a whole, appear no more coercive to defendants than any other kind of litigation. Businesses appear to spend even more money suing each other than they do defending against class actions. There is no reason to believe that class actions are more often frivolous than other types of cases, or that plaintiffs’ attorneys who bring class actions are any more unscrupulous than the other members of their profession. And claims about the costs and burdens of class action litigation underestimate the costs of restricting plaintiffs’ access to the courts. For these reasons and others, prevailing depictions of the costs and burdens of class actions appear to be both unfounded and incomplete.