Bank of America Raises Non-Member ATM Fees To Record High

This USA Today story explains that Bank of America has raised to $3 the fee it charges non-customers for using its ATMs.  The industry standard had been $2.  The article suggests that other banks will follow suit.

Conference on Regional Economic Integration and Consumer Protection in the Americas and in Europe

The Groupe de Recherche en Droit International et Comparé de la Consommation (Gredicc) and the Euro Americana Chair for the Protection of the Consumer will hold an international conference in Montreal (Canada) on the 18 and 19 October 2007 on  Regional economic integration and consumer protection in the Americas and in Europe.  

The  conference will deal with the status of consumer protection policy in six regional integration processes: the North American Free Trade Agreement (NAFTA), the Southern Common Market (MERCOSUR), the Caribbean Community (CARICOM), Andean Community (CAN), the Central American Integration System (SICA) and the European Community (EC).   Among the topics to be given attention are:

• The foundations and legitimacy of consumer protection initiatives being taken at regional level and a first assessment of the regional consumer or acquired legislative corpus;
• How potential conflicts between open borders policy and national consumer protection measures are solved.

Speakers include a great many officials and professors from around the world. For more information, email Thierry Bourgoignie, Directeur du Département and Professeur titulaire, Département des sciences juridiques, Faculté de science politique et de droit, at bourgoignie.thierry@uqam.ca.

August Vehicle Recalls from NHTSA

The National Highway Traffic Safety Administration's August 2007 vehicle recalls are available here.

How Do Low-Income Consumers Feel About Access To Credit

Angela K. Littwin of Harvard discusses that question in a forthcoming article in the Texas Law Review titled "Beyond Usury: A Study of Credit Card Use and Preference Among Low-Income Consumers."  Here's the abstract:

The question of whether to re-impose usury restrictions lies at the heart of the debates over consumer credit regulation. Advocates of interest rate regulations argue that creditors are exploiting low-income borrowers, making huge profits while they lure these families into financial traps from which they can never emerge. Opponents of regulation note the benefits of expanding credit to low-income consumers. This debate has continued for more than two decades, but until now no one has asked the affected families their views about access to credit or what safety features they would welcome. This paper presents original data from a study of low-income women. The findings suggest that usury regulation may be an unnecessarily blunt instrument to provide protection for low-income families, as low-income families themselves can identify credit protection devices that would be more nuanced and more useful.

You can download it at http://ssrn.com/abstract=968330.

Working Paper on Buckeye Arbitration Case

Timothy S. Hall of the University of Louisville - Louis D. Brandeis School of Law has authored "Judicial Policing in Consumer Contracting after Buckeye Check Cashing." Here's the abstract:

The Supreme Court's 2005 decision in Buckeye Check Cashing v. Cardegna explicitly extended the Court's separability doctrine from commercial contracting to consumer contracting. This Article will discuss the conflicts between the traditional judicial role in policing the bargaining process and the imposition of mandatory arbitration through separability. The Article further discusses questions left open after Buckeye regarding the appropriate scope of the Court's embrace of mandatory arbitration in the consumer context. While this Article does not argue, as some have done, for abolition of binding pre-dispute arbitration clauses in the consumer context, it does argue that common-law doctrines designed to ensure fairness and freedom of assent in consumer contracting should be entrusted to those best able to apply them and implement their underlying policies — the courts.

You can download it here.

Times Reports on Mortgages, Regulation of the Toy Industry, Junk Mail, and More

Another weekend, another collection of articles on consumer law issues from the Times.  Today's issue contains the "About New York" column by Jim Dwyer, headlined "Fighting an Outbreak of Mortgages Too Good to Be True," about the Foreclosure Prevention Project at South Brooklyn Legal Services.  The column reports on an offer one client, Tilton Jack, received for a one percent mortgage.  An excerpt:

In fact, the rate was 1 percent — but for one day. On the second day, it increased to 8.13 percent. Now, it is 8.77 percent. But those jumps are not what is sending his mortgage into a financial death spiral.

Under the terms, Mr. Jack’s monthly payment is set as if the mortgage cost just 1 percent, even though it is much more. So the seemingly low rate is a trap: every month, the unpaid interest is being piled onto his principal. When it reaches 110 percent of the original loan, the payments will be adjusted to the full 8.77 percent — on the principal that has been swollen by the unpaid interest.

“The principal has been increasing ever since he got the loan, and his payments will go from $1,100 a month to over $3,000,” said Navid Vazire, a lawyer with the Foreclosure Prevention Project who is representing Mr. Jack.

If only lenders used their imaginations for something more constructive than end-runs around the TILA disclosure rules.

Yesterday's issue contained an article titled "Toy Makers Seek Standards for U.S. Safety" about calls by toy manufacturers for federal regulation.  The stated goal is to reassure consumers about safety.  This contrasts with an editorial in Thursday's paper titled "Consumers Left in the Cold" which criticized Mattel for thinking "that the nation’s threadbare consumer protections are still too stringent and should best be ignored."  The editorial noted that Mattel has been fined by the Consumer Product Safety Commission for failing to report hazards timely.  The editorial also castigated the Bush administration's treatment of the CPSC. 

Thursday's paper contained several interesting articles on consumer issues, including one titled, ""Democrats Prepare Bills to Tighten Loan Rules."  Among the proposals:  barring mortgage brokers from steering borrowers who could qualify for prime loans to more expensive subprime loan and bans on hidden brokerage fees (a.k.a. yield-spread premiums) and prepayment penalties.  Another article, headlined, "Panel Questions Financial Advisers for the Elderly,"  reported on a congressional hearing.  Finally, "For-Profit Crusade Against Junk Mail" describes organizations trying to cut down on junk mail, including efforts to create a "do not mail" list similar to the "do not call" list. 

CL&P Roundup

• The Defense Perspective on the Rise in Class Arbitration:  An interesting new article by two big-firm defense lawyers in Metropolitan Corporate Counsel warns that the drafters of mandatory binding arbitration clauses should be careful what they wish for: "The pervasiveness of arbitration agreements that are silent on the issue of class proceedings . . . ensures that class arbitrations will occur with increased frequency, possibly resulting in large monetary awards or coerced settlement, and with little or no opportunities to obtain meaningful judicial or appellate review.  The widespread availability of class arbitration proceedings has eroded many of the traditional benefits of arbitration, making it a potentially time-consuming, expensive, and unpredictable process, and placing the continued popularity of arbitration as the 'preferred' method of dispute resolution at a critical and decisive point." 

• Two New Decisions Striking Class Arb Waivers.  Adding itself to the growing list of federal circuits, and distinguishing its own prior precedent, this week the Eleventh Circuit issued a great decision striking down a class action waiver in a case in which the plaintiff could not recover attorney's fees.  And the California Supreme Court, extending its landmark Discover Bank ruling considerably, issued a 4-3 ruling last week holding that class action bans may be unenforceable in the context of wage-and-hour claims and that a clause may be procedurally unconscionable even when the contract includes a 30-day "opt-out" provision.  The Eleventh Circuit decision is discussed in depth by Scott Nelson in the post below.

• Judge Young Speaks Out on the Value of Jury Trials:   Federal district judge William Young of Boston recently delivered a spirited speech to the Florida Bar on the role of the jury in American democracy.   Judge Young explains that the American jury system is "dying" because of a combination of, among other things, extravagant federal preemption defenses, mandatory binding arbitration, an increase in the use of summary judgment to prevent cases from going to trial.  No news there, perhaps, but it's rare to hear a sitting federal judge speak the truth about these things, and as candidly as Judge Young does.  It's worth a read.

Eleventh Circuit Strikes Down Arbitration Clause Containing Class-Action Waiver

by Scott L. Nelson

The United States Court of Appeals for the Eleventh Circuit has become the latest court to hold that an arbitration clause that contains a waiver of a consumer's right to bring a class action may be unconscionable if its application would effectively prevent consumers from vindicating their rights.  The opinion, issued this Tuesday, September 4, in the case of Dale v. Comcast Corp., can be found here.

Dale involved a suit against Comcast by cable subscribers claiming that Comcast improperly collected excessive franchise fees from them.  The amounts that were alleged to have been improperly collected within the limitations period added up to less than $11 for each subscriber, making an individual action obviously impractical.  Comcast sought to derail the litigation by invoking a provision in its subscriber agreement providing for mandatory arbitration of all claims at the election of either party and prohibiting arbitration or litigation of any claims on a class basis.

Applying Georgia law, the Eleventh Circuit held that the class-action prohibition was unconscionable -- that is, so one-sided that it cannot in good conscience be enforced. The court held that as applied to a claim such as the one in this case, the prohibition on class actions is unconscionable because "[w]ithout the benefit of a class action mechanism, the subscribers would effectively be precluded from suing Comcast" for the violations at issue. As the court explained, "[t]he cost of vindicating an individual subscriber’s claim, when compared to his or her potential recovery, is too great." Permitting Comcast to avoid litigation through the class-action waiver, the court held, would "allow Comcast to engage in unchecked market behavior that may be unlawful. Corporations should not be permitted to use class action waivers as a means to exculpate themselves from liability for small-value claims."  (emphasis added).

Concurring Opinions on Privacy Issues

The Concurring Opinions Blog has a couple of interesting recent posts on consumer privacy issues.  First, Frank Pasquale blogs here about what type of privacy regulation is appropriate for Google and responds to an editorial in the Economist comparing Google to financial institutions, given that both serve as repositories of information about people.  Second, Neil Richards has a posting here titled "Why There's No First Amendment Right to Sell Personal Data."  That's a subject that has drawn scholarly attention before.  See, e.g., Eugene Volokh, Freedom of Speech and Information Privacy: The Troubling Implications of a Right to Stop People From Speaking About You, 52 Stan. L. Rev. 1049 (2000); Daniel J. Solove, The Virtues of Knowing Less: Justifying Privacy Protections Against Disclosure, 53 Duke L. J. 967 (2003).

Community Revinvestment Act Conference

The Justice Action Center, the New York Law School Law Review, and the Coalition for Debtor Education are hosting a conference on the Community Reinvestment Act on October 12.   The symposium, The Community Reinvestment Act: Still Relevant at 30?, will look back at three decades of the CRA and investigate whether the CRA can address financial issues facing underserved communities, including reverse redlining, subprime and predatory lending, and international multi-service financial institutions.  Among the speakers are Richard Marsico of New York Law School, who has written extensively about the CRA, Allen Fishbein, Director of Housing and Credit Policy, Consumer Federation of America, John Taylor, President & CEO, National Community Reinvestment Coalition, Gregory D. Squires, Professor of Sociology and Public Policy and Public Administration, George Washington University, and representatives from other public interest groups and lenders.  You can read more here.