CL&P Blog

How can businesses demand laws preventing liability for negligently infecting consumers with COVID when so many carelessly don't require employees to wear masks?

by Jeff Sovern

Businesses are lobbying to overturn laws that impose liability for negligently infecting customers with the coronavirus, claiming that they fear frivolous law suits and that they will observe heath guidelines to prevent the spread of the virus. But in fact, plenty of businesses are not even requiring employees to wear masks--and that's with laws the impose liability for negligently infecting customers. If businesses are so afraid of being sued for carelessly infecting customers, why aren't they simply being more careful? We can expect businesses to take even fewer precautions if they face no consequences for negligently getting consumers sick. Before businesses ask legislators to protect them from their own misconduct, they should first get their houses in order.

My Op-ed in The Hill: Should colleges be immune if they negligently infect students with COVID-19?

by Jeff Sovern

Here. Excerpt:

As colleges and universities attempt to persuade students that taking classes on campus is not risky, they are lobbying legislators to pass laws insulating schools from liability if people on campus become infected with COVID-19 due to the school’s own negligence. They shouldn’t be able to have it both ways.

* * *

An industry whose business model depends on convincing people that young adults will be safe with them cannot survive by hiding behind shields against liability for their own misconduct. Instead, universities should trumpet that people can have confidence that they will keep students safe because they will pay a price if they don’t — and then they should take every reasonable step to keep students safe. 

Consumer groups oppose colleges' efforts to get immunity for negligently infecting students with Covid-19

Here.

Comments to CFPB Conservative/Industry Taskforce Due June 1 During a Pandemic

by Jeff Sovern

As we previously noted, the CFPB's Conservative/Industry Taskforce created to make "recommendations for ways to improve and strengthen consumer financial laws and regulations" issued a request for information. Comments are due Monday, June 1. As far as I know, the deadline for commenting has not been extended, despite the fact that we are in a pandemic and there have been requests for an extension. I filed a very short comment complaining about the composition of the taskforce and that the deadline for the request for information is ill-timed. I urge readers of the blog to do the same. The body of my comment appears below the fold.

Forbes: Stimulus Proposal: $10,000 In Credit Card Interest Relief During Coronavirus Pandemic

Here, by Shahar Ziv, taking a deep dive into Norm Silber's and my proposal. Excerpt:

Sadly, the coronavirus pandemic isn’t the first catastrophe to fuel consumer credit challenges. In a paper, Thriving on Adversity: Disclosing Corporate Mistreatment of Consumers Caught in Hurricanes Katrina and Rita and Exploring the Consumer Movement's Response to Crisis and Catastrophe, which was published in the Loyola Consumer Law Review, Norman Silber, the proposal’s lead author, outlined the progressive obstacles that consumers faced in the wake of Hurricane Katrina: Americans let credit balances grow and could only afford to make minimum payments; high interest rates caused the amount owed to increase rapidly, which reduced the amount of available credit; credit scores started to drop, reducing credit lines and access to affordable borrowing; delinquencies and bankruptcies began to rise causing a strain on the national economy. “There were huge problems created as consumers, who were out of work and had extra expenses, all of a sudden couldn’t make installment payments,” Silber told me via phone. “Banks and credit card companies who were supposedly generous by postponing payments and interest, just deferred the problem and eventually starting charging consumers additional fees and getting tough with them.”

Applying the lessons learned from Katrina against the backdrop of the Covid-19 crisis, Silber and Sovern developed a proposal, called the “Credit Card Interest Relief During the Pandemic Act” or CIRPA, to allow consumers and small businesses financed through credit card borrowing to have the credit they need to get past this crisis.

Senate Judiciary Committee holds hearing on proposal to eliminate business liability to consumers for infecting them with Covid-19

by Jeff Sovern

The video and prepared testimony is here. If you have time to read only one, I recommend David Vladeck's excellent statement. 

Though Senate Majority Leader Mitch McConnell has described this terrible proposal as a "red line" for future coronavirus bills, it appears he does not have the full support of his caucus. Republican Senator Mike Lee expressed concerns about the intrusion of a federal law into the state torts domain.

Foohey, Jiménez & Odinet Paper: The Folly of Credit As Pandemic Relief

Pamela Foohey of Indiana University Maurer School of Law, Dalié Jiménez of California, Irvine and Christopher K. Odinet of Oklahoma have written The Folly of Credit As Pandemic Relief

68 UCLA L. Rev. Disc. __ (2020 Forthcoming). Here's the abstract:

Within weeks of the coronavirus pandemic appearing in the United States, the American economy came to a grinding halt. The unprecedented modern health crisis and the collapsing economy forced Congress to make a critical choice about how to help American families survive financially. Congress had two basic options. It could enact policies that provided direct and meaningful financial support to people, without the necessity of later repayment. Or it could pursue policies that temporarily relieved people from their financial obligations, but required that they eventually pay amounts subject to payment moratoria later.

In passing the CARES Act, Congress primarily chose the second option. This option reflects a belief that offering people credit can bring them meaningful relief because it assumes that people will have the ability to pay back the loan as it becomes due. The assumption that people will be able to repay credit masquerading as “relief” in the wake of the pandemic is a serious error that will have enduring negative consequences.

In short, Congress got the balance between providing true money versus what amount to credit products to Americans fundamentally backwards. But given that, unfortunately, the effects of the pandemic likely will continue for months, if not years, it is not too late for Congress to adopt a family financial well-being approach to relief that provides meaningful, widespread, and expanded direct payments to households in distress.

Shmuel Becher on design principles for effective consumer protection legislation

Shmuel I. Becher of New Zeeland's Victoria University of Wellington has written The Puzzle of Effective Consumer Protection Legislation: Challenges, Key Lessons and Design Principles, in The Law and Economics of Regulation, Mathis & Torr eds (forthcoming Springer, 2021). Here is the abstract:

Legislation, even when well-intended, sometimes fails to provide the desired results. By design, the legislative process suffers from “noise” and is typically driven by diverse motives. Inevitably, then, the legislative process generates some mistakes.

In spite of these mistakes, the legal discussion of the mechanics of the legislative process is partial and underdeveloped. Focusing on consumer protection legislation, this chapter aims to fill some of this gap. It makes two complementary arguments. Descriptively, the chapter succinctly points to some predominant weaknesses in the legislative process. It illustrates how consumer protection laws may not only fail to achieve their desired results but can also backfire and harm consumers. Normatively and prescriptively, the chapter calls for a nuanced and holistic attitude to consumer protection legislation. It argues for more cautious and tailored consumer protection legislation, which benefits from healthy skepticism.

The chapter identifies four principles for improving the process of consumer law-making. First is a more careful approach to legislation, where legislatures progress in a gradual and moderate way. The second proposed principle is to approach the legislative process from a multi-disciplinary, evidence-based, empirical perspective. The third principle suggests adopting a humble decision-making process, which employs temporary consumer protection laws. Finally, the fourth principle offers diffusing and delegating some, or perhaps more, legislative and policy responsibility to administrative agencies and consumer organisations.

The chapter draws on consumer protection examples from Europe, North America, Australia, New Zealand and Israel. However, it is largely general in nature. If proven successful, the proposed design principles may be scaled up and implemented in additional jurisdictions and other domains.

Conservative/industry CFPB Taskforce on consumer laws issues request for information

by Jeff Sovern

Earlier this year, the CFPB created a Taskforce to make "recommendations for ways to improve and strengthen consumer financial laws and regulations." The Taskforce is chaired  by George Mason professor Todd Zwyicki and its other members are J. Howard Beales III, Thomas A. Durkin, William C. MacLeod, and Jean Noonan.  As far as I can tell, all the Taskforce members are white Washington, D.C. area folks. They have tended in the past to take conservative positions on consumer law, or represented the industry, or both. I certainly do not mean to suggest that the members of the Taskforce are not qualified to serve on it, nor am I suggesting that any member of the Taskforce will not act in good faith. But a Taskforce that included consumer advocates and more diversity would be more likely to offer a balanced approach to consumer protection and elicit support for its proposals from both sides of the aisle. [Disclosure: I applied to serve on the Taskforce but my application was denied.] 

Another point about the Taskforce: it is to give its final report no later than January of 2021. In other words, if a Democrat wins the presidency this fall, is inaugurated January 20, 2021, immediately fires Director Kraninger (a power the president might or might not have after  SCOTUS decides Seila Law), and names an acting director, the likelihood is that the Taskforce's report would already have been submitted.  

The CFPB's website explains that "The taskforce is in part inspired by an earlier commission established by the Consumer Credit Protection Act (Act) in 1968." But that commission seems very different from the Taskforce in several respects. For one thing, the Commission did not issue its final report until 1972, three years after it was fully constituted. For another, its membership included notable consumer advocates, such as Senator William Proxmire and Representative Leonor K. Sullivan, though it also included industry representatives, such as Ira Millstein and conservatives like Senator John Tower. In other words, the Commission included more ideological diversity and took more time to consider its report. In addition, the Commission was created by an act of Congress, rather than an agency director who has frequently declined to comment on statutes during her testimony before Congress, stating instead that her job is to implement them.

In any event, the Taskforce has now issued a request for information, and you can read it here. It will be interesting to see both what responses it elicits and how the Taskforce treats them.

Bloomberg: Bill would require credit bureaus to stop listing negative items during pandemic

by Jeff Sovern

Evan Weinberger reports here. The bill's text is not yet available at Govtrack. I wonder if the bill would also apply to consumers who have not lost their jobs or had hours cut back because of the pandemic, and if so, what incentives it would create for them.