The Work of the CFPB: Remittances

The CFPB is working on many high-profile issues, such as its study (and potential regulation) of pre-dispute mandatory arbitration agreements in consumer contracts within its purview. But meanwhile, the agency is plugging away on all sorts of things. In February, for instance, it issued this rule regulating companies that process so-called remittances -- money sent overseas by consumers to family and friends. The rule was issued under the Electronic Fund Transfer Act. On Tuesday, the agency issued an updated version of the rule, which will assure that all but companies that process very few remittances will be covered by the rule. The CFPB summarizes the rule as follows:

The rules require companies to give a disclosure to a consumer before the consumer pays for a remittance transfer. The disclosure must list:

• • • The exchange rate,
    • Fees, and
    • The amount of money to be delivered.

Companies must also provide a receipt or proof of payment that repeats the information in the first disclosure. The receipt must also tell consumers the date when the money will arrive.

Companies must provide the disclosures in English. Sometimes companies must also provide the disclosures in other languages.

Go here for the National Consumer Law Center's explanation of the remittance rule.

 

Student Loan Debt Not a National Crisis, Expert Panelists Say

We've been covering student loan debt issues here. We've noted the increase in the amount of student loan debt in the U.S. (now over $1 trillion), the significant default rate, and the large expeditures made by the U.S. government given that it guarantees many student loans made by private lenders. Go, for instance, here, here, and here. 

As explained in this article in the Chronicle of Higher Education, yesterday a panel of experts speaking at a national education conference said that though student loan debt is growing and there are real problems that must be addressed, there's no national crisis. Here's an excerpt:

Warnings of an impending student-loan-debt bubble are sensationalized and overblown, said panelists at a national higher education conference here on Thursday, and those false alarms are distracting policy makers from real problems that are plaguing student borrowers. ... In fact, ... the typical student borrower has a much different profile than is often portrayed in news-media reports on student-debt trends. In a study ... conducted [by Kelly D. Edmiston, a senior economist for the Federal Reserve Bank of Kansas City], ... Mr. Edmiston found that the median student debt—the middle range for all borrowers—is less than $14,000. The average student debt is significantly higher, at more than $24,000, due to the 25 percent of borrowers who owe at least $30,000 for their college education. Still, another quarter of student borrowers owe less than $6,000, Mr. Edmiston found, and less than 3 percent have debt exceeding $100,000. Nearly 11 percent of student borrowers are now delinquent on their payments and, according to the most recent federal data, nearly 9 percent of student loans were in default in 2009, Mr. Edmiston said. Although the number of defaults is on the rise, it is nowhere near the 22-percent level of 1989 and still represents a tiny fraction of the federal budget. While the level of student borrowing is not yet at crisis levels, speakers said, there are problems with the number and amount of college loans, and serious policy considerations that need to be made, such as how to better inform students about the amount of money that they really need to borrow and what kind of loan they are receiving.

Call for Papers for AALS on Response to Debt Crisis Extended

We previously posted about a Call for Papers on the Response to the Debt Crisis for an AALS program at the Conference in January.  The deadline for submissions has been extended to August 31.  The full Call for Papers appears below the fold.

Judge Alsup's "Identify Your Shills" Order

by Paul Alan Levy

Scott Michelman recently blogged here about Judge William Alsup’s recent order directing Google and Oracle to disclose financial relationships with bloggers and others who have published opinions about the intellectual property litigation between those parties.  Although Judge Alsup’s order contains no findings and does not explain its reasoning—and maybe that is itself a problem with an order that is directed to litigants’ financial support for expression—I share Scott’s skepticism about the order.  My reasoning is a little different from his, though.

For example, Scott describes the order this way “that both sides disclose individuals to whom they have paid money to comment about the case publicly.”  Although I rather suspect that this is why the judge entered his order, that isn’t what the order says.  Rather, it demands that each party identity every person who has both (1) written about “any issues in this case” and (2) received any money from either party (or its counsel) other than “normal subscription fees.”   As Eric Goldman points out in the same Ars Technica article in which I was quoted, this could include any blogger who carries Google ads; it also reaches any newspaper that carries ads from either Google or Oracle.   And the order doesn’t require any explanation of why any given writer received money.  So in theory, the judge’s order could produce a ridiculously large quantity of truly useless data.  

Maybe one can understand the judge casting the widest possible net, if his idea is to winnow down from the initial list by asking for more detail about particular writers appearing on a list.  Written too narrowly, the order could be too easily evaded by a litigant who leaves a given writer off the list because, the litigant thinks to itself, "I didn't make that payment to get material written about this case in particular."  Or, "I was hoping to influence a general attitude of friendship, but not to affect any particular articles."  Yet perhaps the judge wasn’t thinking very carefully about the details; the fact that he did not take advertising payments into account in drafting the order suggests at least that much.

But suppose the judge’s order were limited to those authors who were being paid by a party to write about the case, or suppose it was limited to a broader category of writers receiving payment, with the plan being to investigate particular relationships more carefully; Scott’s further question is, is that a worthwhile enterprise?  

I am not prepared to deny that the public’s understanding of expression about the case, and its assessment of individual writers’ credibility, could be better informed if readers knew that a particular writer was a shill paid by one side or the other.   Some public interest groups receive financial support from particular companies or industries, sometimes so much so that an argument could be made that they are beholden to those industries (Public Citizen avoids that problem by taking no money from corporations or, indeed, from governments).  Could the public better analyze the advocacy from those groups?   Might some readers infer that their public policy advocacy may be shaped by their financial supporters?   Might those who advocate one position be better able to rebut their adversaries publicly if they can raise questions about their funding sources?  No question about it (a recent example of such advocacy is here).  I myself have a certain level of curiosity about just who is funding Scott Cleland, the ultimate anti-Google.  But that does not mean that a law requiring all non-profits to identify all funding sources would be sensible, or, indeed, that a law requiring everybody who writes about litigation would be sensible. 

Absent some generally applicable rule of procedure governing payments by advocates, should a federal judge be spending his time (and, necessarily, the litigants’ time) getting to the bottom of the issue of whether particular writers have a financial incentive to cover a particular case or particular legal issues?  The case is over, and Judge Alsup casts his order as possibly being useful “on appeal or on any remand.”  Is that right?  Surely we can expect judges to take public expressions of opinion about issues in litigation for what they are worth without devising new ways to sanction litigants who foster such expression.   Does Judge Alsup think that judges on the Ninth Circuit need to know who gives money to any writer so that they can better decide what credence to give citations to blog articles or, indeed, to purported works of scholarship?  Presumably federal appellate judges and even federal district judges (or their law clerks, more likely) will simply read the cited material and give them the persuasive authority that is inherent in the arguments, without any need to look for the hidden biases that might be revealed by financial information.

It would be nice to have a better sense of what prompted Judge Alsup to issue this order.  Absent a compelling explanation, it doesn't make sense to me.

UPDATE

Oracle responded to the order with a brief disclosure, while Google blew the judge off, saying that the number of names covered by the literal terms of the order was so vast as to make the disclosure too difficullt.  Judge Alsup refused to accept Google's response, correcting some of the most egregiously overinclusive parts of the order (such as advertisers and universities) but demanding identification of non-profit organizations, treatise-writers and bloggers.  Google is also ordered to identify any public commenters among its non-testifying experts (who under the terms of Rule 26(b)(2) and (4) did not have to be disclosed).  Google is directed to conduct "a reasonably diligent search" for commenters covered by the order, and, as if speaking to a child, Judge Alsup says, "Please simply do your best but the impossible is not required. Oracle managed to do it." 

There is a tad more explanation:  "public commentary that purports to be independent may have an influence on the courts and/or their staff if only in subtle ways.  If a treatise author or blogger is paid by a litigant, should not that relationship be known?"

Drahozal Paper: Arbitration Innumeracy

Christopher R. Drahozal of Kansas has written Arbitration Innumeracy, Yearbook on Arbitration and Mediation, (Forthcoming).  Here's the abstract: 

Arbitration innumeracy, as I use the phrase here, is the “inability to deal comfortably with the fundamental notions of number and chance” in evaluating arbitration, particularly consumer and employment arbitration. This article discusses a number of examples of possible arbitration innumeracy — cases in which statistics about arbitration are incomplete or outdated, misunderstood or misused. In particular, it examines empirical studies on: The use of arbitration clauses in credit card agreements; Outcomes in consumer arbitration; Arbitrator selection by the National Arbitration Forum; Class arbitration waivers in consumer arbitration clauses; The incentives of arbitrators and repeat-player bias; and Unintended consequences of restrictions on consumer and employment arbitration clauses.

Each of these topics illustrates a different issue of arbitration innumeracy, ranging from samples that are not representative of the population as a whole to comparisons that do not compare like cases. The sections of this Article put the issue in more complete empirical context and discuss briefly how the arbitration innumeracy impacts the policy debate over consumer and employment arbitration. For consumers of empirical data, avoiding arbitration innumeracy requires a sensitivity to basic statistical concepts and a willingness to look skeptically at empirical research, even when it confirms one’s previously held views.

For producers of empirical data, avoiding arbitration innumeracy requires a willingness to apply proper empirical techniques and, importantly, to recognize the limitations of one’s data. As empirical data becomes ever more important to the intensifying debate over consumer and employment arbitration, avoiding arbitration innumeracy is essential to making sound public policy.

Court orders disclosure regarding advocacy about litigation

This week in a dispute between Google and Oracle, a California federal judge issued an unusual order that both sides disclose individuals to whom they have paid money to comment about the case publicly. Coverage, including commentary from CL&P Blog's own Paul Levy, is here, and the order is here.

Underlying the judge's order appears to be the possibility that the parties are using paid shills to advocate their positions in public. Whether or not that is the case, I'm troubled to see a court opening the door to judicial oversight of speech about litigation. Litigants do not give up their right to speak by filing a lawsuit, except to the extent that speech could undermine the integrity of the proceeding (by influencing a jury, for instance, or by violating a court's protective order). Where judicial integrity concerns are absent, the justification for investigating speech about litigation is unclear to me. Litigation often involves important issues of public policy, and the litigants themselves may be in the best position to inform the public about those issues. So a judicial order that chills a party's out-of-court advocacy by forcing it to disclose how it goes about advocating its position, including its associations for that purpose, would have a dangerous potential to limit public debate.

If the problem the court perceives is that the marketplace of ideas contains speakers who have ulterior motives, then this is a classic case in which the remedy for speech is more speech -- either good muckraking journalism on the subject of paid shills, or a public debate over how much background information listeners should expect a speaker to disclose before listeners decide to take that speaker seriously. Absent some concern for the integrity of a judicial proceedings, it does not seem like a job for a court to police public speech related to the litigation before it.

Senator Grassley and the FDA's "Enemies List"

We blogged here on July 20 about the Food and Drug Administration's monitoring of the emails of FDA scientists who had complained to Congress that the FDA was forcing employees to approve medical devices that posed unacceptable risks. This kind of thing drives Senator Chuck Grassley nuts. He's an FDA watchdog, and he hates it when agencies retaliate against whistleblowers.

On July 27, Grassley sent this lengthy, no-nonsense demand letter to FDA Commissioner Margaret Hamburg. As you will see, Grassley thinks the FDA is stonewalling, and he wants more information, a lot more information. I don't know whether he's gotten any of it yet.

Should the Post Office Be Privatized?

Or are economic conservatives wrong to think that the U.S. Postal Service should be run like a private business? Is privatization best for consumers? Read about these issues in this column by Michael Hiltzik.

GAO Says U.S. Should Reassess Health Effects of Cell Phone Use

Over the years, we have covered the controversy over the possible connection between cell phone use and cancer, and we have discussed the differences between the regulatory approaches taken in the U.S. and abroad. (Go here for instance.) Yesterday, the U.S. Government Accountabilty Office issued this report entitled "Exposure and Testing Requirements for Mobile Phones Should Be Reassessed." As its title indicates, the report found that

[t]he Federal Communications Commission’s (FCC) RF [radio-frequency] energy exposure limit may not reflect the latest research, and testing requirements may not identify maximum exposure in all possible usage conditions. FCC set an RF energy exposure limit for mobile phones in 1996, based on recommendations from federal health and safety agencies and international organizations. These international organizations have updated their exposure limit recommendation in recent years, based on new research, and this new limit has been widely adopted by other countries, including countries in the European Union.

Note that the GAO did not find a connection between cell phone use and cancer nor did it find that current U.S. safety rules are inadequate. Go here to read a summary of the GAO's findings. Read that summary, plus why GAO did the study and GAO's recommendations, after the jump.

Debt Collection Video

Here or click on the embedded video below. (HT: Gina Calabrese)