Consumer Law & Policy Blog

More on Tax Refund Anticipation Loans

    By Brian Wolfman

    The National Consumer Law Center and the Consumer Federation of America have issued a press release warning consumers to avoid tax refund anticipation loans (RALs) and reporting on the state of the RAL industry.  The press release comes in advance of the groups' annual comprehensive report on RALs, which will be available later this month.  To give you a sense of where the NCLC and CFA are coming from, here's an excerpt from the press release:

  Some of America’s most cash-strapped taxpayers – those from low- and moderate-income families – spent nearly $1 billion in the latest year recorded for what is almost always an unnecessary product: the so-called “refund anticipation loan” at income tax time. With another tax season gearing up, consumer advocates at the National Consumer Law Center (NCLC) and Consumer Federation of America (CFA) are warning taxpayers to steer clear of refund anticipation loans (RALs), one of the most avoidable tax-time expenses. New figures reveal that RALs drained about $960 million in loan fees, plus over $100 million in other fees, from the wallets of nearly 9.6 million American taxpayers in 2005. “Taxpayers can save themselves over a billion dollars by just saying ‘no’ to quick tax refund loans,” says NCLC staff attorney Chi Chi Wu. “These loans take a chunk out of your hard earned tax refund, and they expose you to the risk of unmanageable debt if your refund doesn’t arrive as expected.”

     Michelle Singletary discussed the NCLC-CFA findings in her "Color of Money" column in today's Washington Post.  Late last year, NCLC and CFA issued a report on new forms of RALs - - "pay stub" and "holiday" RALs - - which give consumers the opportunity to acquire debt at crushing interest rates year 'round.   I blogged about the earlier report here.

CSPI’s Litigation Project Forces Change By Two Major Food Companies

By Steve Gardner

    Consumers can breathe, or at least eat, a little easier. This past week two major food companies stopped a deceptive practice — claiming that their drinks were “natural” when they were sweetened with high-fructose corn syrup (HFCS). Both companies acted after legal action by the DC-based nutrition and health advocacy group Center for Science in the Public Interest (CSPI).  I’m Litigation Director for CSPI.

    On Monday, January 8, CSPI sued Kraft Foods for claiming that Capri Sun drinks were “natural,” when in fact HFCS was the second ingredient after water. The company immediately announced that it was completely getting rid of the “natural” claim.  The same day, Kraft announced that it was getting rid of the “natural” claim.

    Then, on Friday, January 12, Cadbury Schweppes announced that it, too, would stop calling HFCS-filled 7UP “all natural.”  This announcement culminated several months of negotiations between Cadbury and CSPI.

In Time For Christmas Dinner 2007?: Will the FDA Allow the Marketing of Milk and Meat from Cloned Animals?

    Recommended reading:  Today's Washington Post story indicating that the FDA may soon allow the marketing of milk and meat from cloned animals.  Here are a couple paragraphs from the story to give you a taste of the issue:

Later this week, the [FDA] is expected to release a formal recommendation that milk and meat from cloned animals should be allowed on grocery store shelves. The long-awaited decision comes as polling data to be released this week show that the public continues to have little appetite for such food, with many people saying the FDA should keep it off the market.

The FDA decision is based on a substantial cache of data from rigorous studies, all of which have concluded that milk and meat from cloned animals is virtually identical to such products from conventional animals. Scientists have also been unable to detect health problems in laboratory animals raised on clonal food.

Times Takes a Look at Payday Lending

Today's New York Times has an article on payday lending, "Seductively Easy, Payday Loans Often Snowball." The piece focuses on Gallup, New Mexico, a town with a population of 22,000 that has over 40 storefront payday lending outfits, many of whose clientelle are Navajo or Hispanic. Although the Times presents the industry's spin and uses the term 'predatory lending' in scare quotes, the overall picture is one of an industry run amok at the expense of the most vulnerable consumers.

Payday lending is a hot topic around the country right now. Here are some other interesting articles from past few days: An piece in the Virginian-Times Pilot discusses North Carolina's successful efforts to combat payday lending, including providing low-cost alternatives: Will Virginia adopt North Carolina's example? In Arkansas, this article reports, legislators have introduced a bill to curb payday lending because the state supreme court hasn't enforced the state constitution's usury cap. And in Oregon, the industry has found ways to get around recent anti-payday-lending laws. (For more information, see this page at Center for Responsible Lending's website.)

Just What You're Hankerin' For: A Bevy of Articles About CAFA

Need some enthralling holiday reading?  Looking for a great stocking stuffer?  You're in luck!  The Loyola of Los Angeles Law Review has published a bunch of articles available here on the Class Action Fairness Act.  After a foreword by Georgene Vairo, here's what you get:

• Removal, Remand, and Other Procedural Issues Under the Class Action Fairness Act of 2005 by Lauren D. Fredricks

• Plaintiffs' Paradise Lost: Diversity of Citizenship and Amount in Controversy Under the Class Action Fairness Act of 2005 by Cameron Fredman

• Once More Into the Breach, Dear Friends: the Case for Congressional Revision of the Mass Actions Provisions in the Class Action Fairness Act of 2005 by S. Amy Spencer

• New Rules for Class-Action Settlements: the Consumer Class Action Bill of Rights by Jennifer Gibson

• The Class Action Fairness Act of 2005: a First Year Retrospective Review by Lonny Sheinkopf Hoffman

Overlooking the Obvious in the Supreme Court's Disappearing Docket?

by Chris Peterson

Today's  New York Times reports that the Supreme Court has granted cert to 40% fewer cases this term than last.  Furthermore, "[t]he number of cases the court decided with signed opinions last term, 69, was the lowest since 1953 and fewer than half the number the court was deciding as recently as the mid-1980s." All this despite Chief Justice Roberts' stated intention to take more cases under his leadership.

The article goes on to speculate on possible causes of the decline. Some Court watchers hypothesize that the Justices are refusing to vote for cert. because they are worried about loosing. Others speculate that because Congress has not passed as many statutes lately, there are fewer circuit splits on statutory interpretation. A former Deputy Solicitor blames the clerks wondering if they refuse to recommend cert because they are afraid of loosing the high court equivalent of "street cred."  The article also quotes Orin Kerr who suggests we might all be better off anyway.

The Justices themselves are apparently at a loss. The Times reports that "[i]n private conversations, the justices themselves insist that nothing so profound is going on, but rather seem mystified at what they perceive as a paucity of cases that meet the court’s standard criteria."

Here's another clue in the mystery of the declining docket: maybe the cases are being arbitrated. Readers of the Consumer Law and Policy Blog are familiar with the chorus of complaints on the increasing use of mandatory, binding arbitration clauses in boilerplate contracts with borrowers, buyers, and employees. A significant bulk of disputes over federal regulation can now be effectively diverted out of the judicial system into a private, secret, profit-seeking, dispute resolution system. Many doctrinal areas we should expect to create a significant amount of appellate litigation--employment discrimination, employee benefits, warranty law, and consumer credit law--are all amenable to arbitration. The country cannot develop circuit splits without stare decisis.

Obviously we will not know until someone comes up with an empirical study showing the effect of arbitration on the volume of cases meeting the Supreme Court's cert. criteria. Coming up with reliable control variables would probably be tough. I am wondering whether anyone out there in the blogosphere has any clever ideas on a way to measure this?

Senate Democrats Plan Crackdown on Credit Card Practices

The following excerpt is from an article published on November 30 in CQ Today and is reprinted by permission:

Senate Democrats Plan Crackdown on Credit Card Practices

    A leading Democrat said today he will push to curb “abusive” practices of credit card issuers when his party takes control of Congress next year.

    “Education . . . I’m afraid, isn’t going to be enough,” said Sen. Carl Levin, D-Mich., stressing the need for new legislation and regulation in a speech at the Center for American Progress. “Without that club, without that stick, we’re not going to see reforms coming.”

    Levin pledged to hold hearings on the issue early next year as chairman of the Senate Homeland Security and Governmental Affairs’ Permanent Subcommittee on Investigations. He said he expects Sen. Christopher J. Dodd, D-Conn., who will chair the Senate Banking panel, to introduce legislation, though the timing remains unclear. Levin said he hoped to cosponsor Dodd’s bill.

    Levin took aim at what he described as unfair and confusing practices by credit card issuers, practices he said are used to reap “extraordinary” profits. And he said these fees, interest rate and disclosure practices take advantage of low- and middle-class American families.

    “They’re the brunt of those excesses,” he said.

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"Tort Reform"/Prop. 64

    by Brian Wolfman

    Today, over at Point of Law, Ted Frank has this post on a number of "tort reform" items, including the American Tort Reform Association's new report on what it views as class action abuse.  ATRA's basic claim is that consumer class actions today are largely driven by lawyer greed and left-leaning interest group politics and not by a desire to compensate people who have been harmed.  For a different point of view on the movement to "reform" consumer class actions, see Ira Rheingold's earlier post on this blog.

    Also in today's Point of Law post is a discussion of the current litigation before the California Supreme Court presenting the question whether California's Proposition 64 silently amended the state's consumer protection statutes to require consumer reliance at the same time that it expressly added stricter standing requirements.  The Point of Law discussion links to previous posts on this blog on that important litigation.

Senator Dodd on Credit Cards

by Jeff Sovern

  Today's New York Times has an interesting article about Senator Dodd, the incoming chair of the Senate Banking Committee.  Here's a quote:  "At a hearing this year, [Senator Dodd] said that credit cards increasingly were little more than 'pocket-sized predatory loans' and that he has proposed legislation that would curtail the ability of the companies to market credit cards to students who were not able to afford debt."   I can't remeber seeing credit cards compared to predatory loans before. 

In Time for the Holidays: U.S. PIRG Issues Its Annual "Trouble in Toyland" Report

by Brian Wolfman

I noticed at U.S. PIRG's blog that PIRG has issued its 21st Annual "Trouble in Toyland" Report.  This important report both alerts consumers to potential toy hazards in advance of the holidays and effectively pressures the Consumer Product Safety Commission to take action against dangerous toys.  As PIRG explains:  "The reports have resulted in well over 120 recalls and other actions by the Consumer Product Safety Commission (CPSC) and toy manufacturers. This year's report emphasizes toys that pose choking, excessive noise, acute and chronic toxic and magnetic ingestion hazards."  Check it out.