Pro Publica investigates intern practices

As Pro Publica explains, "In April 2010, the Department of Labor released a six-point test to help determine whether an internship in the for-profit sector qualifies to be unpaid under federal law. One of the key criteria is that the position must be of more benefit to the intern than of benefit to the company. Companies can’t just use interns to replace regular employees."

But there have been complaints that enforcement of those standards has not been sufficiently rigorous. Pro Publica is investigating and wants to hear from anyone who has interned in the past three years.

The Hill: Sen. Warren calls for giving student borrowers the same loan rate as banks

Here.  Excerpt:

 

The current rate for loans from the window is about 0.75 percent,  while students are facing rates of 6.8 percent, Warren said.

"In other words, the federal government is going to charge  students interest rates that are nine times higher than the rates for the  biggest banks — the same banks that destroyed millions of jobs and nearly broke  this economy," she said. "That isn't right. And that is why I'm introducing  legislation today to give students the same deal that we give to the big  banks."

Health care price disparities

Check out this article about some revealing data released this week comparing hospital pricing.

For the first time, the federal government [released] the prices that hospitals charge for the 100 most common inpatient procedures. Until now, these charges have been closely held by facilities that see a competitive advantage in shielding their fees from competitors. What the numbers reveal is a health-care system with tremendous, seemingly random variation in the costs of services.

How does such a state of affairs persist? The Post reports:

Experts attribute the disparities to a health system that can set prices with impunity because consumers rarely see them — and rarely shop for discounts.

CFPB issues report responding to public input on student loan affordability

The Consumer Financial Protection Bureau today issued this report entitled "Student Loan Affordability--Analysis of Public Input on Impact and Solutions." The report's executive summary appears after the jump.

The agency also issued this companion fact sheet.

The fact sheet includes what it calls "Student Loan Debt by the Numbers":

• $1.1 trillion: Approximate amount of outstanding student loan debt—second only to mortgages in household debt.
• 1-in-5: U.S. households that have student loans.
• $26,682: Average outstanding balance for a borrower with student debt.
• 1-in-8: Share of borrowers with more than $50,000 in student debt.
• 40 percent: Share of American households headed by someone under 35 that have student loan debt.
• 25 percent: Share of borrowers under age 30 that spend more than 10 percent of their income on student loan payments.
• 30 percent: Share of borrowers in repayment that are delinquent on a student loan.
• 6.7 million: Number of borrowers who are more than 90 days delinquent on a student loan.
• 31 percent: Percentage increase in the number of student loan borrowers between 2007 and 2012.

Hadeed Carpet Cleaning Seeks to Suppress a Dirty Secret

by Paul Alan Levy

You can’t live in the DC area and not encounter the pervasive advertising for Hadeed Carpet Cleaning, from mailed coupons and display advertising in the Washington Post that promise unbelievably low prices, to classic rock broadcast from the “Hadeed.com Studios” and advertising during Washington Capitals games. But regular users of pages about Hadeed on the Yelp web site quickly learn Hadeed’s dirty secret —  more than thirty of the eighty-odd reviews posted there complain that the advertised prices are routinely not honored.  

Even one of Hadeed’s Yelp admirers, who gave Hadeed four of five stars for the quality of its work, ridiculed the complainers in these terms: “I can give a life lesson to the people who only wanted the $99 special, there is no such thing! Every wall to wall cleaning company uses that as a way to lure you in but no one will charge you $99.”  She also gives her secret about how to protect against unannounced price increases from Hadeed: pay in advance! 

Apparently hoping to deter further criticism, Hadeed has singled out seven anonymous reviewers as defendants in a defamation lawsuit.  It does not deny that its service staff routinely demand higher-than-advertised prices when they show up to do the work, but instead claims that it suspects, based on a mysterious review of some customer database, that these seven reviews were really posted by some unnamed competitor. Unlike some other ISP’s lately, Yelp is standing up for its users’ privacy, and so refused to comply with a Virginia subpoena because (among other reasons) Hadeed never provided any evidence that the gist of the reviews was false.  Hadeed moved to compel compliance, and the trial judge, refusing to apply the otherwise-broadly-accepted Dendrite test, ordered compliance because it felt that it was enough for Hadeed to show that the statements “may be tortious.”   And when Yelp refused to comply – because Virginia requires non-party discovery recipients to commit contempt of court to get the right to appeal — the court found it in contempt.

In an appellate brief that we have filed today on behalf of Yelp, we make two basic points.   First, Virginia should agree with other states that demand both a legal and a factual showing that the lawsuit has merit.  In that regard, read carefully, Hadeed’s defamation claim asserts only that the individual reviewers were not really customers, and Hadeed is not defamed by false statements about whether a given defendant was a customer. Nor, indeed, has Hadeed offered any reason to credit its supposition that the seven reviewers were not customers; what evidence there is in the record points in the other direction.

We also argue that a California company like Yelp should not be subject to a Virginia subpoena just because its web site is accessible in Virginia and because Virginia companies like Hadeed advertise on the web site.  When AOL was based in Virginia, litigants in other states had to get Virginia subpoenas to demand identifying information about AOL users; by the same token, Hadeed should have to use the normal interstate discovery procedures when it wants identifying information about Yelp users from ISP's in other states.

The "retirement crisis" and some eye-opening data about Americans' savings

The main point of this Washington Post column is to describe the looming danger facing retirees with insufficient savings, and to suggest one possible answer (a supplement to Social Security). But I found the column most interesting for its discussion of savings rates among even Americans living above the median income (spoiler alert: they're alarmingly low). Another interesting tidbit:

A 2011 study found that half of American families couldn’t put their hands on $2000 within 30 days if an emergency struck. As the authors wrote, that $2000 amount “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair.”

Helps explain how easily people fall into debt, and why consumer protection laws are so important to so many people.

FTC and CFPB to Host Joint Roundtable on the "Life of a Debt"

On June 6, the FTC and the CFPB will co-host a joint roundtable event, "Life of a Debt: Data Integrity in Debt Collection," to examine the flow of consumer data throughout the debt collection process. The event, held at the FTC, will bring together consumer advocates, credit issuers, collection industry members, state and federal regulators, and academics to exchange information on a range of issues. Topics will include:

• the amount of documentation and other information currently available to different types of collectors and at different points in the debt collection process;
• the information needed to verify and substantiate debts;
• the costs and benefits of providing consumers with additional disclosures about their debts and debt-related rights; and
•  information issues relating to pleading and judgment in debt collection litigation.

The roundtable is free and open to the public; it will be held at the FTC’s Satellite Building Conference Center, 601 New Jersey Avenue, NW, Washington, D.C. and will also be streamed live online. An RSVP is suggested as space is limited. 

For more information, including the agenda, go here.

Arbitration Fairness Act Reintroduced Today in Congress

by Deepak Gupta

The Arbitration Fairness Act of 2013 -- legislation that would ban mandatory pre-dispute binding arbitration in consumer and employment contracts -- was introduced today in both houses of Congress by Senator Al Franken (D-Minn.) and Rep. Hank Johnson (D-Ga.). New to this version of the bill--an exclusion for antitrust disputes.

The House bill (H.R. 1844) has 22 original cosponsors; the Senate bill (S. 878) has 17 original cosponsors. The legislation's proponents hope to use the bill as a catalyst for movement on arbitration in a number of areas -- including hearings, expanded coalition building, continued media attention, as well as supporting action at the CFPB and the SEC and through additional future legislation.

Here's a letter of support from a broad coalition of supporters, including the AFL-CIO, American Association for Justice, American Civil Liberties Union, Consumer Federation of America, Consumers Union, NAACP, National Association of Consumer Advocates, Public Citizen, and U.S. PIRG, among others.

Learn more: Take Justice Back, Fair Arbitration Now.

CFPB goes after two lawyers in alleged debt relief scam

The Blog of the Legal Times reports that

The Consumer Financial Protection Bureau today filed suit against two lawyers and two debt relief companies, alleging they charged thousands of consumers illegal advance fees and left some worse off financially. One of the lawyers, Michael Levitis, also faces face mail and wire fraud charges brought by the Manhattan U.S. Attorney’s office -- the first-ever criminal charges stemming from a CFPB referral. * * * What’s notable is that the complaint describes the acts as both deceptive and unfair, but omits the statute’s third element, abusive. While unfair and deceptive are familiar terms in consumer protection law, the term “abusive” is new to Dodd-Frank. Among Republicans in Congress, it’s been the subject of much consternation. At a hearing last year, for example, U.S. Rep. Sean Duffy (R-Wis.) called it "a subjective standard with no bright line.” The CFPB wants the court to force the defendants to disgorge their ill-gotten profits, award restitution to consumers and impose other civil money penalties.

"The Practice: Class Action Cacophony at the Supreme Court"

That's the name of this short essay by law professor Linda Mullenix on the Supreme Court's recent class-actions decisions in the Amgen, Comcast, and Standard Fire decisions. Here is the abstract:

The article surveys the Court’s liberal and conservative divide on class certification issues, giving some support to both the plaintiff and defense sides of the class action docket. In Amgen, in an opinion by Justice Ginsburg, a divided Court again saved the fraud on the market presumption for certification of securities class actions. On the other hand, in Comcast, in an opinion authored by Justice Scalia, an equally divided Court found fatal to class certification the failure of proof of classwide damages for a Rule 23(b)(3) damage action. The Comcast decision, coupled with a concurrence by Justice Alito, suggests that there may be at least four votes for the Court to consider the original fraud on the market presumption announced in the landmark case, Basic v. Levinson. Although embodying different outcomes, the Amgen and Comcast decisions both embrace the same litany of core class certification principles. However, the Court in neither case has clarified or illuminated further the debate over the extent to which trial courts may properly assess the underlying merits of class claims as part of the certification process. Instead, the Court in both cases deflected the merits conversation into the Rule 23 predominance requirement. Finally, in Standard Fire Ins. Co. v. Knowles, in an opinion by Justice Breyer, a unanimous Court agreed that a class representative could not stipulate to less than the $5 million damage threshold in order to evade removal under the Class Action Fairness Act of 2005. A class representative could bind himself, but had no power or authority to bind absent class members.