Paper on Forum Shopping in Debt Collection

Judith L. Fox of Notre Dame has written How Forum Determines Substance in Judicial Debt Collection, 31 Banking and Financial Services Rev. 11 (August 2012). Here's the abstract:

In an email to the Small Claims Task Force, a committee appointed by the Indiana Supreme Court to investigate allegations of abuse in the Marion County Small Claims Court, an Indiana attorney claimed that collection attorneys were forum shopping in Indiana small claims court. In its subsequent report, the task force confirmed that some forum shopping is occurring in Marion County Small claims courts. This study takes that allegation a step further and looks beyond the small claims courts of Marion County to examine the forum shopping practices of collection attorneys throughout Indiana. The evidence suggests that collection firms do forum shop between courts in individual judicial districts. This article takes a closer look at forum shopping by exploring the possible motivations for the forum shopping and its implications for consumers.

Join the Campaign Against eBay's Unfair Forced Arbitration Policy!

Recently, we've discussed (here and here) eBay's terrible new forced arbitration clause that prohibits its customers from going to court and bans class actions. Class actions are often the only way to hold corporations accountable when they break the law and harm their customers.

We told you that eBay is trying to give the world the impression that it is treating its customers fairly by giving them to right to opt out of its forced arbitration policy, while making it as difficult as possible to exercise the opt-out right. In reality, eBay is trying to prevent its customers from using the civil justice system.

But Public Citizen is fighting back. It is urging eBay customers to opt out so they can retain their rights to go to court and to participate in class actions. Public Citizen has created a form letter that eBay customers can use to opt out, along with instructions on how customers can exercise their opt-out rights. Consumers are also urged to sign this on-line petition:

We, the undersigned, call on eBay to remove from its terms of service the forced arbitration clause and the ban on joining together in a class action. EBay customers should not be required to sacrifice their legal rights. If eBay refuses to remove these terms, the company should at least provide an online opt-out option.

For more information, see Public Citizen's letter to eBay's CEO demanding that eBay get rid of its forced arbitration policy and class-action ban, and read Public Citizen's press release.

Pay-for-Delay Settlements Go to the Supreme Court

In a pay-for-delay settlement, a brand-name drug company pays a generic company that has challenged the brand-name company's patent to stay out of the market. Some early antitrust challenges to these settlements succeeded, but later court of appeals' rulings gave them a green light. But, as we discussed in this post in July, the Third Circuit sought to apply the brakes in In re: K-Dur Antitrust Litigation, which demanded serious antitrust scrutiny of those settlements. Earlier, we had posted (here, here, and here) about the FTC's efforts to police pay-for-delay settlements.

Now, as reported by the Washington Post, the FTC has asked the Supreme Court to review "a different case involving Solvay Pharmaceuticals, which paid three generic drugmakers that agreed not to sell versions of its testosterone-replacement drug, called Androgel, until 2015." We'll keep you posted.

Graphic Explains How Credit Scores are Calculated

Here.  It might serve for a series of slides for those teaching consumer law.

Genetically Engineered Food Labeling Around the World

We posted recently about whether California will become the first state in the U.S. to require labeling of genetically engineered food. Now, the Center for Food Safety has posted this map showing which countries have what labeling requirements for genetically engineered foods. (HT to Andrew Kaufman)

More on eBay's Binding Arbitration Clause

A couple weeks ago we discussed (here and here) eBay's new binding arbitration clause that will keep its customers out of court and ban class actions. Now, David Lazarus of the LA Times has penned this article about eBay's efforts to take away its customers' rights through arbitration.

Former FDIC Head Sheila Bair on the CFPB

Bair has a new book out, and so has been the subject of some media attention.  CNN/Money interviewed her and among the questions was an exchange about the CFPB.  Her reply: 

I support the Bureau, and I also strongly endorse it in the book.  And I think they're doing a good job.  I am, if I have one little complaint, and I do have one little complaint, it is that the rules are still too long and complex.  . . .  I think consumers can understand what their rights and protections are.  Smaller banks have basically gotten out of consumer finance because it's just too hard.  The compliance costs are just too hard.  . . .

But they're ramping up.  Finally somebody is examining the non-bank sector, and establishing more of an enforcement presence there, which I think is very important.  And I think they are sending a strong signal to regulated banks as well, but in a way that seems to me, the cases I've seen, are very much justified and in line with their mandate.  So, I don't for the life of me understand why there is this continued controversy and turmoil over the Consumer Bureau.  We did not do a good job protecting consumers of financial products leading up to the crisis.  So, it just didn't happen.  And having a bureau that specifically focused on that I think is a positive thing, and over time it will prove itself.

Ray Brescia Reports on Grading Banks

The short version, coauthored with John DeStefano, is at HuffPo.  Here's an excerpt:

CIRC is a system for scoring local banks on a variety of issues that are important to consumers, like the amount banks charge their customers to open and maintain accounts, the location of their local branches and ATMs, and the nature and extent of their home mortgage lending in the community. Point values are assigned to each category of information. For products and services, a high score -- usually three points -- was given to a bank if it went far in providing services the typical consumer would want: like offering checking accounts with low minimum balance requirements and at no fee. A weaker showing in a particular category would earn a bank a lower score in that category. With home mortgage lending, each bank that serves the New Haven community was measured against the lending practices of the other banks operating in the community. For example, by determining whether their loan denial rate was higher or lower than the median rate in the community, or their lending to blacks and Latinos was consistent with the practices of the other banks, we were able to determine whether each bank's practices were better or worse than those of its peers. The system assigned point values under each home mortgage category similar to those applied in the products and services categories.

A longer version, written with Sonia Steinway and titled Scoring the Banks: Building a Behaviorally Informed Community Impact Report Card for Financial Institutions to appear in 18 Fordham Journal of Corporate and Financial Law (2012) is available on SSRN.  Here's the abstract:

The U.S. financial system faces a crisis. Unlike fiscal crises, this one is of consumer confidence and trust. Recent polls suggest that faith in American banks is at a 40-year low. Many blame the banking sector for having a significant role in causing and exacerbating the financial crisis of 2008 and the deep recession that has followed it. Scandals, litigation and a lack of accountability for conduct that has breached the public trust mean that many consumers of bank services are starting to call for greater transparency in banking practices, financial institutions that are more responsive to community needs, and broader array of alternatives to traditional banks. Movements such as the Move Your Money campaign and Bank Transfer Day have captured the imagination of many bank customers who are looking to use their consumer clout to support financial institutions that are engaged in responsible practices.

Perhaps as a way to counter this crisis in confidence, regulators, local governments and consumers alike seek ways to measure bank responsiveness to consumer wishes and community needs. This paper describes one such tool: the Community Impact Report Card (CIRC). Modeled on other grading systems — like New York City’s method for grading restaurants — and informed by principles of behavioral economics, the CIRC is a tool designed to offer consumers a means through which they can easily comparison shop between banks based on those banks’ effectiveness in meeting consumer demand for accessible and inexpensive products and services, and to encourage banks to strengthen the array of products and services they offer. By providing a range of information about the products and services offered by local banks, and generating a single score for each bank based on this information on a scale of 1-100, consumers will have an easily accessible way to compare how each bank serving the community is generally responsive to community needs and interests. Flexible and adaptable, the CIRC system is designed to be crafted to the needs of local communities and to apply to the array of financial institutions that serve them.

It would be great if this worked (regular readers may recall that we have blogged about a similar idea, but this seems well beyond what we wrote about).  It has worked for restaurants, and has improved them in ways that benefit not just those who pay attention to the grades, but also those who don't.. 

Advocacy Group Releases Film Saying That Recent Supreme Court Decisions Are Anti-Consumer

As explained in this article by Todd Ruger, the "liberal public interest group [Alliance for Justice] in Washington released a new documentary Monday that focuses on three Supreme Court rulings that the group says has favored big businesses at the expense of consumers and victims of discrimination." Click here or on the video embedded below to view the film.

 

Should Supreme Court Justices Tell Us Why They Do and Do Not Recuse?

When a Supreme Court justice decides not to participate in a case, he or she is not required by law to say why (and rarely does). Similarly, when a party asks a Supreme Court justice to recuse and the justice doesn't, typically neither the justice nor the Court says why. In this extensive analysis, the New York City Bar has concluded that Supreme Court justices generally should publicly disclose the basis for their decisions to recuse and for denying a motion to disqualify them from participating in a case. This position is consistent with the position taken in The Supreme Court Transparency and Disclosure Act of 2011, which is pending before the Congress.