Banks Fear Consumer Confusion as House Moves Up Effective Date for Credit CARD Act

by Jeff Sovern

Earlier this week, as the Times reported, the House passed a bill to move up the effective date of some of the Credit CARD Act provisions to December 1.  Here's an excerpt from the Times article:

Industry executives, however, said the move could backfire by prompting companies to restrict the availability of credit at a time when the economy is in a recession.

“This will create significant confusion for consumers and will further restrict access to credit for both consumers and small businesses, all to the detriment of the broader economy,” said Kenneth J. Clayton, a senior vice president at the American Bankers Association.

It's a relief to see that banks are concerned about consumer confusion.  I wish that concern extended to their consumer contracts.

Jenzabar Tries to Forbid Blogging About Its Abusive Trademark Litigation

The educational software company Jenzabar, whose abusive trademark claims were criticized in my own blog post here as well as by another Public Citizen employee on the Citizen Vox blog last month, is now claiming that such blogging is illegal.  According to Jenzabar, a blog post nominating Jenzabar for the “Trademark Abusers Hall of Shame” will “create controversy” and “cause prejudice to Jenzabar,” and any lawyer who engages in such blogging is in violation of Massachusetts court rules. 

Jenzabar has sued the Long Bow Group for placing Jenzabar’s name in the keyword meta tags for a web page about Jenzabar, which, Jenzabar claims, has unfairly placed this web page among the top search results when Internet users do a search for “Jenzabar.”  This placement, Jenzabar protests, allows university IT personnel who are trying to decide whether to buy Jenzabar’s software and services to learn adverse facts about Jenzabar which might, in turn, lead them to decide not to do business with Jenzabar.

Jenzabar is particularly exercised that my blog post cited a statement by Google back in September announcing that its search rankings have not employed keyword meta tags for many years.  This information, Jenzabar insists, is not admissible in court because Matt Cutts’ statements on the subject on the Google’s blog for webmasters, which Google calls “Official News,” is not an “official statement by Google.”  It appears to be Jenzabar's position that blog posts about a lawsuit must comply with the rules of evidence.

Interestingly, earlier this year, Long Bow published on its own web site, at the request of Jenzabar's counsel, a lengthy statement about the litigation.  During her deposition, Jenzabar founder and former Tiananmen student leader Chai Ling testified it was Jenzabar’s own lawyers who wrote that “extrajudicial statement.”  It seems that what is sauce for the goose is not sauce for the gander in Jenzabar’s book.

Jenzabar’s persistent efforts to suppress criticism continue to raise questions of hypocrisy in light of the company's use of its founder's life story, as a symbol of the resistance to tyranny in China, to promote its business.

Baltimore v Wells Fargo - Targetting Blacks for Subprime

The Consumerist blog has posted the full text of the two remarkable Wells Fargo loan officer affidavits that describe in detail the lender's systematic targetting of Black homeowners to sell them high-price subprime mortgages, regardless of how good their credit might have been. The case of City of Baltimore vs. Wells Fargo Bank, 1:08-cv-00062-BEL in the Maryland Federal District Court, is now in discovery, Judge Legg having denied a motion to dismiss in July.  

Jeff Gelles Column on How Credit Card Issuers Used the Long Effective Dates of the Credit CARD Act

Here.  An excerpt:

[Under the Credit CARD Act,] card issuers such as Citibank and Chase will have to quit a set of practices that regulators and lawmakers have finally outlawed as unfair or deceptive.

But not right away. In a concession to the arguments of the card industry that it needed lots of time to adjust, most of the new rules were delayed until February. Some won't take effect until August.

The result? According to a new study by the Pew Charitable Trusts, the nation's dozen largest card issuers - led by banks that taxpayers have spent billions to bail out - have doubled down on the practices that got them in trouble in the first place.

* * *

Last week, researchers from Pew's Safe Credit Cards Project said every bank credit card they had looked at, nearly 400, bore at least one of the terms that will soon be outlawed as unfair or deceptive.

I wonder what this will do to the credibility of financial companies the next time they claim they need time to implement changes. The House Financial Services Committee is trying to move the effective date forward.

Shauhin A. Talesh on the Privatization of Public Legal Rights

Shauhin A. Talesh has written The Privatization of Public Legal Rights: How Manufacturers Construct the Meaning of Consumer Law, 43 Law  & Society Review 527 (2009).  Here's the abstract:

This article demonstrates how the content and meaning of California’s consumer protection laws were shaped by automobile manufacturers, the very group these laws were designed to regulate. My analysis draws on and links two literatures that examine the relationship between law and organizations but often overlook one another: political science studies of how businesses influence public legal institutions, and neo-institutional sociology studies of how organizations shape law within their organizational field. By integrating these literatures, I develop an ‘‘institutional-political’’ theory that demonstrates how organizations’ construction of law and compliance within an organizational field shapes the meaning of law among legislators and judges.

This study examines case law and more than 35 years of California legislative history concerning its consumer warranty laws. Using institutional and political analysis, I show how auto manufacturers, who were initially subject to powerful consumer protection laws, weakened the impact of these laws by creating dispute resolution venues. The legislature and courts subsequentlyincorporated private dispute resolution venues into statutes and court decisions and made consumer rights and remedies largely contingent on consumers first using manufacturer-sponsored venues. Organizational venue creation resulted in public legal rights being redefined and controlled by private organizations.

 

Huffington Post Op-Ed on the Law Professor Letter Supporting the Consumer Financial Protection Agency

Here.  And here's the concluding paragraph:

Perhaps those of us who have studied and taught consumer protection law are as much to blame as the banks and regulators for the mishaps of the recent past: we were too quiet while they made the mistakes that led to the economic crisis. We law professors have learned from our mistakes. We hope Congress has, too.

Federal Legislation Pending Regarding Bank Overdraft Fees

by Brian Wolfman

Check out this article in today's Washington Post by Jeff Plungis concerning proposed federal legislation on bank overdraft fees. The article's focus is on legislation championed by Rep. Barney Frank that would make overdraft protection on debit cards available on an opt-in basis only. Right now, some banks enroll customers in overdraft protection on debit cards without their consent and then charge nearly $40 after a customer makes a purchase when the customer's account lacks sufficient funds to cover the purchase. As Frank puts it:

We wouldn't be in a situation where we're considering legislation if you would have had an opt-in regime from the beginning. Don't do people favors without asking them.

CPSC Recalls for October 2009

Go here for the Consumer Product Safety Commission's product safety recalls for October 2009.

Norm Silber on How Opposition to the CFPA Connects to Traditional Anti-Consumer Protection Efforts

Here.

Federal/State Agencies Obfuscate on Bankruptcy

Foreclosurebuzz has done an interesting survey of government web sites purporting to offer aid to consumers facing foreclosure.  Most agency web sites do not mention bankruptcy at all, despite the fact that Chapter 13, and in some cases Chapter 7, can provide an array of tools to restructure debt, and in the case of underwater second mortgages, eliminate debt.  The Comptroller of the Currency characterizes bankruptcy as a scam, more or less.  The FTC also implies that bankruptcy is not a legitimate option, discussing it only in the context of rescue scams. Senator Durbin is right - the banks own Washington (and apparently many state bank regulators as well.)