USA Today investigation of tainted dietary supplements

We've been covering the serious health hazards associated with dietary supplements (for instance, here, here, and here). We've noted that although dietary supplements have drug-like effects and supplement makers market their products by trumpeting those effects, the products are not regulated like drugs by the FDA. In fact, unlike drugs, they are marketed without governmental pre-approval. With that in mind, read this USA Today investigative report by Alison Young about tainted dietary supplements and some of the people who run the industry.

CFPB and 49 states require mortgage loan servicer to pay $2 billion for systemic misconduct in mortgage servicing

The CFPB, 49 states, and the District of Columbia have entered into an agreement with Ocwen Financial Corp. the largest nonbank mortgage servicer in the country, that requires Ocwen to provide more than $2 billion in relief to homeowners. The relief will be in the form of principal reduction and refunds to customers whose homes were foreclosed. "Since 2009, Ocwen has been taking advantage of homeowners with shortcuts and unauthorized fees and deceiving consumers about loan modifications," according to the CFPB.

Ocwen specializes in handling subprime or delinquent loans. Because Ocwen services loans but does not hold loans, it cannot directly reduce the amount of principal. But Ocwen has agreed to offer and facilitate loan modifications for borrowers facing foreclosure. The CFPB explains some of the details here. The 173-page order is accessible through a pdf linked at the top of that page. The CFPB's press release is posted here.

Time to pass a "bill of non-attainder" for Edward Snowden

by Paul Alan Levy    

Whatever happens as a result of Judge Leon's decision this week and whatever comes of today's recommendations from the intelligence review panel, we cannot forget who it was who helped our country get to the stage of having this debate, not to speak of the personal price he has had to pay as a whistleblower -- turning to foreign dictatorships for refuge.  We should be treating him as a hero for what he did, and Congress can do something about it.

The constitution bars a bill of attainder -- a law declaring that a particular individual is guilty of a crime. But there is no reason why Congress cannot enact a bill of non-attainder: a statute declaring retroactively that Edward Snowden is not guilty of any crime for what he has done to date, and forbidding the government from prosecuting him for past conduct.  Surely we owe him that much for what he has done for us.

Another Legal Front for AirBnB

The blogosphere has been humming with concern about a subpoena from the Attorney General of New York seeking to identify AirBnB users who are likely renting out their apartments in violation of local law.  It appears, however, that the AG isn't the only one concerned -- note this letter from a co-op board warning its shareholders against short-term rentals that apparently violate the proprietary lease, and, at least in the view of this co-op, raise safety issues. 

Utah couple sues online retailer for wrecking customer's credit score in response to online criticism

You may recall the story of John Palmer of Utah, from whom online retailer KlearGear.com demanded $3500 after John’s wife Jen posted an online review discussing the couple's bad experience with KlearGear’s customer service. When John refused to pay the outrageous demand, KlearGear reported the $3500 alleged “debt” to the credit reporting agencies and wrecked John’s credit.

According to KlearGear, John owed the money because when Jen posted her review, John violated a “non-disparagement clause” in the site’s Terms of Sale and Use that prohibited users from taking any action that negatively impacts KlearGear.com or its reputation, on pain of a $3500 fine. But this prohibition didn’t appear in the Terms when John Palmer used KlearGear's website back in 2008 (in fact, the Internet Archive reveals that it didn’t show up until more than three years later!), and even if it had, businesses aren’t allowed to enforce outlandish terms like this one in their fine print.

Three weeks ago, Public Citizen sent KlearGear a demand letter on behalf of the Palmers, asking the company to clear up John’s credit, to compensate the Palmers for their ordeal -- which included a car loan delayed, a credit card denied, and three weeks this fall that the Palmers and their three-year-old son spent without heat in their home because their furnace broke and they couldn’t get a loan to pay for new one -- and to stop using the “non-disparagement clause” on their customers.

KlearGear never responded.

So today, Public Citizen filed suit on behalf of the Palmers, seeking a judicial declaration that the $3500 so-called “debt” is invalid and seeking economic, emotional, consequential, and punitive damages for KlearGear’s abusive practices, which have drawn attention nationally (for instance, ABC and CNN) and even internationally (see this coverage from the UK, Israel, and France). 

Today’s case was filed in federal court in Utah. The complaint also names as a defendant debt collector Fidelity Information Corp., for the purpose of the declaratory judgment that John doesn't owe any money (John’s credit report reflects that Fidelity now owns the supposed “debt”). In addition to declaratory relief, the claims against KlearGear include violations of the federal Fair Credit Reporting Act, defamation, intentional interference with economic relations, and intentional infliction of emotional distress. You can read the full complaint here.

The state of the U.S. auto industry

The auto industry was dying. The 2008-2009 crash was not the cause but would accelerate it. And perhaps the government-funded bailout was a waste. But, wait .... Listen to this IPR report on the U.S. auto industry rebound, which says not only that sales are up 50% from its 2009 low point, but that the domestic care market is in good shape for a generation to come.

For a low-income worker, a small payday loan can mean a debt that lasts forever

Paul Kiel of ProPublica has written When Lenders Sue, Quick Cash Can Turn Into a Lifetime of Debt, which describes how a $1,000 payday loan at 400% interest can become a $40,000 debt. The investigative report not only looks at the plight of individual borrowers but provides a comprehensive review of payday loan court enforcement in two states. Kiel also spoke with former employees of loan companies who described how the companies operate:

In Mississippi, the poorest state in the country, the largest installment lender is Tower Loan. Mississippi laws prevent installment lenders from charging the triple-digit rates common in some other states, but Tower has ways of magnifying the cost of borrowing. The company, for instance, packages expensive but nearly useless insurance with the loans and encourages its customers to renew their loans over and over – both common industry practices. The company’s ideal customer is someone “who can’t ever get out of debt,” said Josh Lewis, who worked at a Tower store in rural Yazoo County in 2010. “It was sad watching low-income people get in that hole,” said John Barfield, who worked at a store last year. “It's very, very common at Tower Loan.”

Regulatory delay and electoral politics

This front-page Washington Post investigative report, well worth a read, documents the troubling effect of election-year politics on important regulatory actions. The lede summarizes:

The White House systematically delayed enacting a series of rules on the environment, worker safety and health care to prevent them from becoming points of contention before the 2012 election, according to documents and interviews with current and former administration officials.

The administration has previously characterized the correlation between the election and the pace of regulation as coincidental. Numerous former and current administration officials, however, told the Post otherwise.

New lawsuit seeks to enjoin the Florida Bar's efforts to squelch free speech on law-firm websites

Despite that pesky First Amendment, state bars around the country often have tried to limit what lawyers can say in advertising to prospective clients. The Florida Bar has always been a leader in this area. And, now, in rules that went into effect earlier this year, the Florida Bar had decided that ordinary promotional techniques -- and even speech on certain issues of general public concern -- can no longer appear on law-firm websites and in popular forms of social media.

In this lawsuit filed yesterday, a Florida law firm and its partners have challenged the new rules on First Amendment and due process (vagueness) grounds. Here's an excerpt from the introductory allegations in the complaint:

For decades, the Florida Bar has stood apart from the rest of the nation in the restrictiveness of its rules governing lawyer advertising. The rules prohibit a range of common advertising of the sort that lawyers in other states use as a matter of course and that poses no risk of misleading consumers. But until recently, lawyer websites were exempt from these prohibitions. As long as they complied with the general restriction on false and misleading advertising, Florida lawyers could set up websites, publish blogs, and participate in popular social-media sites ... . That has now changed. Under amendments that became effective earlier this year, websites are subject for the first time to all of the rules’ restrictions. ... According to the Bar, [plaintiff law firm] Searcy Denney’s website and blog violate a rule requiring statements to be “objectively verifiable” because the websites express opinions on issues of public concern, including statements that the days “when we could trust big corporations … are over,” that “[g]overnment regulation of … consumer safety has been lackadaisical at best,” and that “when it comes to ‘tort reform’ there is a single winner: the insurance industry.” The Bar also found garden-variety statements about the firm’s services and past cases to be “inherently misleading” because the statements do not include all “pertinent” facts of each case, while at the same time refusing the firm’s requests to clarify what facts the Bar considers pertinent. And it concluded that the firm’s pages on the social-media site LinkedIn.com violate several of the rules’ provisions because—among other things—LinkedIn automatically lists the firm’s “specialties” and includes an unsolicited review posted by a former client. ... Florida’s rules are so broad that they would have subjected Abraham Lincoln to discipline for stating, in an 1852 newspaper advertisement, that his firm handled business with “promptness and fidelity”—two words that are no more “objectively verifiable” than those the Bar concludes violate its ethics rules here.

A painful object lesson in the costs of austerity

Check out this excellent and gutwrenching Post story, which explains more clearly than most sequester reporting how -- and why -- the sequester affected different federal programs differently, and tells the story of how four-year-old Kentuckian Carli Hopkins got kicked out of preschool by a federal budget plan adopted because of inertia and accident.