Ten New NCLC Publications with Companion Websites

Automatic subscribers to NCLC manuals by now have received their updates:  two revised editions, six supplements and a new Consumer Law Pleadings.  All 18 consumer law manuals now come with companion websites, including an updated Consumer Law on the Web.  The new updates include:

Unfair and Deceptive Acts and Practices Seventh Edition with Companion Website (1216 pp.)

Consumer Law Pleadings Website with 2008 Index Guide (one year website access and 640 pp. guide)

Consumer Bankruptcy Law and Practice 2008 Supplement with Companion Website (534 pp.)

Fair Credit Reporting 2008 Supplement with Companion Website (500 pp.)

Truth in Lending 2008 Supplement with Companion Website (330 pp.)  

 Consumer Arbitration Agreements 2008 Supplement with Companion Website (190 pp.)

Access to Utility Service Fourth Edition with Companion Website (788 pp.) 

Student Loan Law 2008 Supplement with Companion Website (320 pp.)

Repossessions 2008 Supplement with Companion Website  (230 pp.)

Consumer Law on the Web (everything on the 18 individual websites in one location)

 

These publications can be ordered at 617-542-9595 or on-line at www.consumerlaw.org/shop

New 50 State UDAP Report Card

A new report by the National Consumer Law Center: “Consumer Protection in the States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes,” issued February 5, 2009, analyzes and summarizes unfair and deceptive acts and practices (UDAP) laws in the 50 states and the District of Columbia. 

 

The report identifies gaps and weaknesses in the substance, scope, and remedies of these laws.  In some states the UDAP statutes have so many gaps and weaknesses, or have been so severly undermined by judicial decisions, that they are of little or no use to consumers.

 

The report identifies a number of measures that states can take to strengthen consumer protections, including

● enact broader prohibitions on deceptive and unfair acts.

● fill gaps in the scope of UDAP statutes.

● increase penalties for violations.

● eliminate financial barriers and risks that prevent victims from filing UDAP lawsuits.

● lower technical obstacles that impede consumer redress.

 

The report is available at www.nclc.org, and more particularly at this link.

NCLC Report on Credit Report Dispute System

by Jeff Sovern

The National Consumer Law Center released a report authored by Chi Chi Wu last week, Automated Injustice: How a Mechanized Dispute System Frustrates Consumers Seeking to Fix Errors in Their Credit Reports, that charges that Equifax, Experian, and TransUnion handle credit reporting disputes "in an automated and perfunctory manner." Here's an excerpt from the accompanying press release:

* * * The report details how credit bureaus: translate detailed disputes painstakingly written by desperate consumers into two or three digit codes; Fail to send documents submitted by consumers, such as cancelled checks or payoff statements, to creditors and other information providers involved in the dispute; [and]  Limit the role of their employees who handle disputes, or of the foreign workers employed by their offshore vendors, to little more than selecting these two or three digit codes. Workers do not examine documents, contact consumers by phone or email, or exercise any form of human discretion in resolving a dispute.

The New York Times coverage of the report is here.  I'm inserting below two excerpts from the Times' story: first the industry response, which personally I found unpersuasive, and a paragraph on planned federal rules:

Stuart K. Pratt, the president of the Consumer Data Industry Association, said consumers were partly to blame for the lack of detail about their discrepancies. He acknowledged that the credit bureaus “do have the opportunity to add some granularity to the coded dispute that goes off to the lender.” But 55 to 60 percent of consumer disputes contained no supporting documentation, he said.

And most consumers who supply documentation, Mr. Pratt added, include only standardized forms offered on a credit bureau’s Web site, rather than extensive documentation of their own.

“Most consumers don’t want to work too hard to have it taken care of,” he said.

* * *

The Obama administration is expected to announce new rules later this year that would allow consumers who find mistakes in their reports to contact the creditors directly. The creditors would be required to respond to the consumers. “That way,” [assistant director of the Federal Trade Commission’s division of privacy and identity protection] Ms. Kuehn said, “we won’t be cutting out the most important line of information — from the consumer to the company that’s providing the information in the first place.”

Given the at least theoretical independence of the FTC from the Obama administration, it seems odd to characterize the proposed rules' source as the Obama administration, but they sound like an improvement over the current situation.  For what it's worth, my own view is that credit bureaus should be strictly liable for reporting errors, to give them an incentive to improve accuracy, as stated in The Jewel of Their Souls: Preventing Identity Theft Through Loss Alloaccation Rules, 64 University of Pittsburgh Law Review 343 (2003).

[Sorry about the formatting; as you can see, I'm having some trouble getting the post to appear correctly.]

The Wrong Foreclosure Plan

By Alan White

All indications are that the Administration will announce a foreclosure plan next week that consists largely of throwing taxpayer money at investor losses.  This is as wrong-headed as it could possibly be.

Absent from all discussions are any proposals to stop, delay, or reduce the number of foreclosures.  Loose campaign talk about a moratorium seems to have been forgotten.  Remember those "troubled assets" that are dragging down the financial system?  Many are linked to mortgages that are currently valued based on the last 3 to 6 months' performance, which consisted largely of foreclosing mindlessly at 50% to 60% loss severities.  The value of bank assets would be enhanced, not further diminished, if mortgage servicers, with some help from bankruptcy courts, stopped foreclosing and started writing down mortgage debt to sustainable levels for every homeowner willing to make payments.  There is absolutely no reason to fork over taxpayer dollars to cover 25% losses on loan modifications, when investors are today absorbing 60% losses on foreclosures.

Three ingredients are necessary for a successful foreclosure plan.  First, foreclosures have to be stopped, for a long enough period to work out every salvageable loan.  Second, servicers must be compelled, by bankruptcy or other legislation, to write down mortgage principal and interest for every homeowner who can afford her house.  Third, any taxpayer funds should be used to compensate mortgage servicers directly for good performance, i.e. for successful sustainable modifications.  The servicers, not the investors, are making the (wrong) decisions now about foreclosures.  Changing their behavior can stop the simultaneous housing and banking catastrophes, and do far more for investors than Treasury payments or guarantees.

National Motor Vehicle Title Information System Begins

Last Friday, the National Motor Vehicle Title Information System began operations.  The database is to list cars that have been determined to be too badly damaged to be worth repairing or that were stolen, so that consumers can avoid buying such cars.  At present the database includes 27 states, but it is supposed to include all of them by next year.  You can read the Times Wheels Blog report here, and here is an excerpt, which quotes blog co-coordinator Deepak Gupta:

[C]onsumer advocates said the biggest improvement is that for the first time salvage yards, junkyards and insurance companies will be required to report on vehicles that had been totaled. That doesn’t start until March 30.

Getting information from junkyards and insurance companies is important because it will provide consumers with information on “the worst of the worst” vehicles, said Rosemary Shahan, the president of Citizens for Auto Reliability and Safety.

Ms. Shahan’s group is one of three consumer organizations that sued the Justice Department early last year in an attempt to force the department to carry out the law. The other groups are Public Citizen and Consumer Action.

There are, however, a few glitches already. One is that the California and New York departments of motor vehicles are balking at providing information, said Deepak Gupta, a lawyer for Public Citizen.

“They are making money by selling data to private companies,” Mr. Gupta said. “They are concerned if the data is available publicly they won’t get that revenue. That is really what is happening here.”

The National Law Journal's coverage is here.

The impending sell-out

The Naked Capitalism blog has an excellent discussion today of why the Administration's likely plan to rescue banks is a rescue for shareholders and bondholders and a disaster for taxpayers.

Ben-Shahar on the Opportunity to Read Contracts

Omri Ben-Shahar  of Chicago has written The Myth of the 'Opportunity to Read' in Contract Law.  Here's the abstract:

Standard form contracts in consumer transactions are usually not read by consumers. This "unreadness" of contracts creates opportunities for drafters to engage in unfair trade practices. Various doctrines of contracts and consumer protection law address this concern. One of the prominent solutions coming out of recent proposals for reform is to give individuals a more substantial opportunity to read the contract before manifesting assent. With the greater opportunity to read, more transactors will actually read the terms and assent to the boilerplate will be more "robust." This Essay argues that solutions that focus on providing consumers an opportunity to read are useless, and can potentially be harmful. Most likely, greater opportunity to read would not produce greater readership of contracts - not the type that can help people make informed decisions - and the purpose of this solution would not be achieved, and could have unintended consequences. Even if the compliance with the requirement of opportunity-to-read is fairly cheap (e.g., giving consumers access to the boilerplate in advance), making this a central feature of the legal regulation of standard form contracts makes little sense. The paper ends by proposing non-legal approaches to making the contract terms more transparent, by building on market devices such as ratings and labeling.

Self-Promoting Post

OK, it's not consumer law, but I had another letter in the Times today.  Here it is:

To the Editor:

Why not bar banks taking bailout money from giving any employee compensation exceeding some extremely comfortable amount, say $250,000 a year, without government approval, until they have repaid the bailout?

Jeff Sovern
Jamaica, Queens, Jan. 27, 2009

The writer is a professor of law at St. John’s University.

Also available on the Times web site at http://www.nytimes.com/2009/02/02/opinion/l02comp.html?_r=1&ref=opinion

Fed Proposes to Bar Banks From Automatically Enrolling Customers in Overdraft Protection Plans

The Fed has proposed an amendment to Regulation E and the accompanying commentary that would bar banks from enrolling consumers in their overdraft protection plans without customer approval. The proposal is available here.  Comments are due by March 30.  Here's the Fed's summary of the proposal:

The proposal would limit the ability of a financial institution to assess an overdraft fee for paying automated teller machine (ATM) withdrawals and onetime debit card transactions that overdraw a consumer’s account, unless the consumer is given notice of the right to opt out of the payment of such overdrafts, and the consumer does not opt out. As an alternative approach, the proposal would limit the ability of a financial institution to assess an overdraft fee for paying ATM withdrawals and one-time debit card transactions that overdraw a consumer’s account, unless the consumer affirmatively consents, or opts in, to the institution’s payment of overdrafts for these transactions. In addition, the proposal would prohibit financial institutions from assessing an overdraft fee if the overdraft would not have occurred but for a debit hold placed on funds in the consumer’s account that exceeds the actual amount of the transaction.

And here's the Center for Responsible Lending's take:

Banks should simply not be allowed to enroll their customers—without their permission—in systems that approve overdrafts without warning, and that artificially increase the number of $35 fees the banks' can charge for a shortfall. It is fundamentally unfair.

As the FDIC confirmed through a survey of their banks, the practice is out of control. It is costing working people big chunks of their hard-earned income.

You can find more from the Center for Responsible Lending here.  Comments to the Fed can be emailed to

regs.comments@federalreserve.govand should include in the subject heading Docket No. R-1343.

Fox News Backs Away from Copyright Claim Against ProgressIllinois.com -- For Now

by Paul Alan Levy

Fox News, which filed DMCA takedown notices late last year against three excerpts showing significant remarks by political figures during news interviews that were posted by ProgressIllinois.com on YouTube, as well as the Progress Illinois blog, has admitted defeat for now.  Fox was either unable or unwilling to back up its copyright complaint against ProgressIllinois.com, which posted three video excerpts from Fox newscasts.  By failing to file suit to enforce its claims, Fox has shown it recognizes that the use of the excerpts were fair use. The clips have now been restored to Progress Illinois' blog and its YouTube account, which had been suspended, is active.

Public Citizen, which represented Progress Illinois in this matter, tried to talk to Fox about its claim filed under the Digital Millennium Copyright Act (DMCA) and discuss possible guidelines for future use, but we received a chilling demand. As a price of getting the DMCA takedowns lifted, Fox demanded that Progress Illinois waive its fair use rights for all future uses of Fox material.

Fox's position is that the price of making fair use of excerpts from its news broadcasts is that an otherwise non-commercial blogger must allow Fox to run advertisements on the blog as part of the excerpt. Specifically, Fox is apparently in the course of negotiating with a third-party video-hosting service, which bloggers who want use Fox excerpts would be required to use, rather than bloggers making their own choice between other services including YouTube and blip.tv  (which Progress Illinois began using, with great success, after YouTube suspended its account). The third-party service would then incorporate ads from Fox advertisers into any excerpt made from Fox material and Fox would receive the proceeds from the ads. It appears that Fox is preparing to argue that, because it has the capacity of charging advertisement revenues for excerpts posted by bloggers, any blogger who does not use these services fails the "fourth" factor  in the fair use test  - "the effect of the use upon the potential market for or value of the copyrighted work."