Shutdown's effects on finances of federal workers

Politico reports that on the effects of the government shutdown on federal workers, some of whom are turning to installment loans, car title loans, and payday cash advances, which charge exorbitantly high interest. Others are making payments late, risking long-term damage to their credit scores. The article is here.

California payday lender settles predatory lending allegations

In a consent order with California's Department of Business Oversight, a payday lender called California Check Cashing Stores agreed to refund about $800,000 to consumers, to settle allegations that it steered borrowers into high-interest loans and engaged in other illegal practices. It also agreed to pay $105,000 in penalties and other costs. The settlement involves alleged violations regarding administration of payday loans, which are capped at $300, and the steering of borrowers into consumer loans of more than $2,500 to avoid the state rate caps.

The Los Angeles Times article is here.

CNN.com Op-Ed:Congress should follow California's lead in protecting consumers

by Jeff Sovern

My latest, here. The conclusion:

When it comes to these varied privacy problems, Congress has somehow managed to be both comatose and angry. Given its inability to respond nimbly in the rapidly shifting privacy arena, Congress should avoid hamstringing those who can. Any federal privacy law should preserve the power of states to protect consumers so states can continue experimenting and respond quickly to privacy challenges. Congress should also increase the FTC's budget and give the Commission the power to issue regulations. Congress should follow California's lead in obliging companies to tell consumers upon request what they know about them and what they do with the information. If Congress cannot help, it at least should not make things worse.

Holding Facebook Accountable

According to a recent story from Tony Romm and Elizabeth Dwoskin at the Washington Post, “U.S. regulators have met to discuss imposing a record-setting fine against Facebook” for violating a 2011 consent decree that settled charges that Facebook deceived consumers with regard to its privacy policies and practices. In March 2018, the Federal Trade Commission confirmed that it had an “open non-public investigation” into Facebook’s privacy practices. That investigation was prompted, in large part, by the Cambridge Analytica scandal. According to the reporting:

The FTC’s exact findings in its Facebook investigation and the total amount of the fine, which the agency’s five commissioners have discussed at a private meeting in recent weeks, have not been finalized, two of the people said. Staff has briefed the commissioners about their probe, the third person said, and plan to issue a formal recommendation for a fine soon — a move that would then trigger a vote by the commissioners.

The full story is available here.

Jacob Hale Russell Paper Shows Death of Unconscionablity Doctrine is Greatly Exaggerated

Jacob Hale Russell of Rutgers and Stanford's Arthur & Toni Rembe Rock Center for Corporate Governance has written Unconscionability's Greatly Exaggerated Death. Here is the abstract:

Reports of unconscionability’s demise are greatly exaggerated. According to conventional wisdom, the common-law contracts doctrine is rarely used, except in limiting clauses that purport to waive consumers’ remedial rights. In fact, as this Article documents, the doctrine is quietly flourishing: courts are using it to strike down substantive terms, including interest rates, in consumer finance contracts. In recent years judges across the country have rewritten or voided payday loans, signature loans, overdraft fees, and mortgage contracts on the grounds that their interest rates or other core terms were unconscionably unfair. 

Since unconscionability is alive and well, the time is ripe to answer an unexplored question in the doctrine’s contours. How tailored should the unconscionability analysis be to the characteristics of a particular consumer entering into a contract, versus untailored to the typical, median, or “reasonable” consumer? This Article advances an argument in favor of tailoring unconscionability. In addition to consistency with unconscionability’s theoretical underpinnings, tailoring brings the doctrine in line with modern contracting practices. Today’s consumer contracts involve increasing market segmentation, individualized pricing, and customization of terms, in stark contrast to the stylized view of boilerplate that most scholars take for granted. Unconscionability can thus play an important role in consumer protection policy, which faces the challenge that consumers are highly heterogeneous and need different protections. Courts have a particular edge here: they specialize in individualized fact-finding, in contrast to regulations, which are generally one-size-fits-all.

CFPB and NY settle with Sterling Jewelers over enrolling customers in credit cards without the customers' consent

The State of New York and the Consumer Financial Protection Bureau (which is not shut down) yesterday settled claims against Sterling Jewelers, based on findings that that the company violated the Consumer Financial Protection Act of 2010 by opening store credit-card accounts without customer consent; enrolling customers in payment-protection insurance without their consent; and misrepresenting to consumers the financing terms associated with the credit-card accounts. The CFPB also found Truth in Lending Act violations, based on Sterling signing customers up for credit-card accounts without having received an oral or written request or application from them.

Under the settlement, the company will pay a $10 million civil money penalty to the CFPB and a $1 million civil money penalty to New York. The settlement also includes injunctive relief designed to prevent the continuation of the wrongdoing.

The consent order is here.

So apparently Wells Fargo is not the only company to sign people up for accounts without consent. The scope of wrongdoing by Wells Fargo, and the penalty, were of course much larger.

Representative Katie Porter to Join House Financial Services Committee

by Jeff Sovern

The media has devoted considerable attention to Representative Alexandria Ocasio-Cortez's joining the House Financial Services Committee. I'm glad she is on the committee--the more members who are not beholden to banks, the better--and I suspect few realize how intelligent Ocasio-Cortez is (taking second place in the Intel competition is an impressive accomplishment).  But I believe the rookie member of the committee who is likely to have the most impact is former professor Katie Porter.  Not only is Porter brilliant, she is also extremely knowledgeable about consumer law and bankruptcy, having studied and written about them for years. She also brings the practical experience that comes from having monitored the mortgage settlement in California. During hearings, she may know more than some witnesses about the matters the witnesses are testifying about. She promises to be a formidable member of the committee, and I hope its members defer to her judgment.

Not Entirely "Unpresidented" -- The History of the Domain Name Used to Parody the Washington Post

The Yes Men perpetrated (or perhaps only collaborated on) a parody of the Washington Post today, distributing tens of thousands of hard copy editions date-lined May 1, 2019 (making the parody too obvious), but also transmitting email from “send85-proxymailing@washingtonpost.com” domain, which in turn links to a fairly extensive parody web site located at my-washingtonpost.com. A second email, purporting to come from an email address on the washingtonpost.com domain, purported to provide a correction:

“An earlier email from the Washington Post erroneously stated that President Trump has departed the Oval Office. We stand corrected (by ourselves, as well as dozens of Twitter users). This event in fact occurred three months and a half from now, possibly."

For those of us with a sense of history, it was startling to see that the parodists were using the domain name my-washingtonpost.com, a name that was featured in litigation running from 2002 to 2005 under the Lanham Act and the then-fairly new anti-cybersquatting law, the ACPA.

Changes to consumer law in 2019

The National Consumer Law Center has a list of federal and state consumer law changes scheduled to take effect in 2019, as well as several changes that were effective in November and December of 2018 that have special relevance in 2019. The list is here.

In latest from Trump Administration's "deregulatory agenda," hospitals are required to post prices and post meaningless gibberish

by Jeff Sovern

So reports the NY Times. Excerpt:

Vanderbilt University Medical Center, responding to a new Trump administration order to begin posting all hospital prices, listed a charge of $42,569 for a cardiology procedure described as “HC PTC CLOS PAT DUCT ART.”

Baptist Health in Miami helpfully told consumers that an “Embolza Protect 5.5” would cost them $9,818 while a “Visceral selective angio rad” runs a mere $5,538.

More evidence that disclosure is usually an unsuccessful consumer protection, but the Trump administration is locked in ideologically to disclosure, as demonstrated by the quote in the article from Seema Verma, the administrator of the Centers for Medicare and Medicaid Services: “This is about empowering patients.” Disclosure often provides the illusion of consumer protection without the reality. Could it be that the administration wants to be able to say it is empowering patients, while actually providing them no benefit whatsoever?