Senator Elizabeth Warren


Harvard law professor, originator of the Consumer Financial Protection Bureau, and consumer-advocate-in-chief Elizabeth Warren will be a U.S. senator.

Supreme Court to Decide Whether a Defendant Can Get Costs Under the FDCPA

Everyone agrees that a consumer plaintiff who prevails in a Fair Debt Collection Practices Act lawsuit is entitled to get his or her attorney fees and costs paid by the debt collector defendant. But in Marx v. General Revenue Corporation, the question is whether, under the Federal Rules of Civil Procedure, a debt collector can collect costs from an unsuccessful plaintiff. In other words, does the FDCPA apply, or do the rules of civil procedure?

This is a Really Big Deal, because if debt collectors can collect costs from unsuccessful plaintiffs, it will make it riskier to sue debt collectors. Quite apart from the law, the whole point of the FDCPA is to provide a formidable check on debt collection abuses. Damages in these cases are small, so if they cannot recover attorney fees and costs — or if they risk having to pay substantial costs — they will not sue.

If you want people to be able to stop debt collection abuses, then you cannot increase the risk. Doing so will render the FDCPA far less effective as a check on debt collection abuses. If you think consumers and consumer lawyers are running amok, then I suppose you favor the debt collector’s position.

Read Argument preview: Court considers litigation expenses in debt-collection disputes on SCOTUSblog. (Thanks, Graham!)

“Browsewrap” Agreement Found Unenforceable

Before you get all excited, this decision is just one federal district court judge’s opinion. That said, here’s the deal. The Zappos website had a little link at the bottom to its terms of use, which said that, by merely browsing the website, you agree to submit to mandatory binding arbitration of any disputes — like if you had a problem with the big Zappos security breach that potentially affected 24 million consumers. Zappos tried to rely on its browsewrap agreement, but the court said no way.

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American Bar Association Didn’t Want the CFPB to Look After Debt Collection Lawyers

According to the National Law Journal*, the American Bar Association’s Business Law Section filed comments (PDF) with the Consumer Financial Protection Bureau objecting to its latest move to assume jurisdiction over debt collectorsplenty of which are lawyers and law firms. Lawyers don’t like anyone regulating us but other lawyers, generally through state professional responsibility boards, which hear complaints and dole out punishment for ethical infractions. Judges can also punish lawyers for misusing the legal system.

But those options don’t seem to have stemmed the tide of complaints about debt collection abuses, some of which surely come from law firms with more than $10 million in annual receipts from debt collection — the ones now subject to the CFPB’s jurisdiction. Exempting debt collectors from the CFPB’s jurisdiction just because they happen to work for a law firm would be just as silly as exempting them from the Fair Debt Collection Practices Act. Which they aren’t.

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CFPB Turns its Eye to Debt Collectors

Today, the Consumer Financial Protection Bureau announced that it would finally start taking a good, hard look at the debt collection industry. It’s about time. Few industries need the attention more.

The CFPB also released 3 resources (all in PDF format):

Read Consumer Financial Protection Bureau to oversee debt collectors from the CFPB.

Gurstel Chargo’s “Accountability Matters” Campaign

For as often as I represented people sued by Gurstel Chargo or sued Gurstel Chargo for FDCPA violations, I’m shocked at how little I wrote about one of Minnesota’s busiest debt collection law firms. I actually know the marketer (a lovely person, actually) who came up with Gurstel’s current marketing campaign, and I chuckled when I saw it for the first time. Accountability Matters as a debt collector slogan is the height of hubris. I’m just grateful I’m here to see Gurstel take its own medicine.

Here’s what a Gurstel lawyer collector told a disabled veteran:

Fuck you! Pay us your money! You can’t afford an attorney. You owe us. I hope your wife divorces your ass. If you would have served our country better you would not be a disabled veteran living off social security while the rest of us honest Americans work our ass off. Too bad; you should have died.

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PayPal Puts the Kibosh on Class Actions

PayPal is the latest to join a growing list of companies (including eBay) who want to keep consumers out of courts and class actions. You can opt out of mandatory binding arbitration, at least, but you’ll be stuck with the class action ban either way. Opting out is not easy. Here’s what you have to do:

You can choose to reject this Agreement to Arbitrate (“opt out”) by mailing us a written opt-out notice (“Opt-Out Notice”). For new PayPal users, the Opt-Out Notice must be postmarked no later than 30 Days after the date you accept the User Agreement for the first time. If you are already a current PayPal user and previously accepted the User Agreement prior to the introduction of this Agreement to Arbitrate, the Opt-Out Notice must be postmarked no later than December 1, 2012. You must mail the Opt-Out Notice to PayPal, Inc., Attn: Litigation Department, 2211 North First Street, San Jose, CA 95131.

Voter Fraud is Practically Nonexistent — Let’s Do Something About It!

Sarah Silverman takes aim at the rash of Voter ID bills and constitutional amendments sweeping the nation, which are, of course, completely unnecessary and serve mainly to disenfranchise the poor, the elderly, veterans, and students. Yay democracy!

Debt Collectors Deputized by District Attorneys

It’s not surprising that debt collectors are always trying to figure out new ways to cloak themselves with the appearance of authority. That’s why the Fair Debt Collection Practices Act doesn’t allow debt collectors to pretend to be affiliated with the government:

The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.

Of course, that’s not very effective when the government — in the form of prosecutors — essentially deputizes debt collectors to send collection letters on official letterhead. It’s attractive for the district attorneys involved. They get to farm out bad check collection, putting it out of sight and out of mind, while raking in a profit.

Prosecutors’ job is to enforce the law. One important part of that job is exercising some discretion over who to prosecute. That’s especially important in bad check cases. People bounce checks all the time, usually unintentionally. That doesn’t make them crimes. So a prosecutor’s job is to sort out the crimes from the accidents. Under the new arrangement, everybody gets contacted by a debt collector, which then demands even more money for a budgeting class — the profit from which goes into the collector’s pocket.

But, as Jeff Sovern points out at Consumer Law & Policy, the collectors are walking a thin line, at best. Not to mention what has to be horrible PR for the district attorneys involved, who should be doing their jobs, not farming out their discretion — and their letterhead — to debt collectors.


Minnesota For-Profit Schools Under Investigation for “Predatory Recruitment”

Among the for-profit colleges targeted by a Senate committee led by Senator Tom Harkin are Minnesota schools Capella University, Walden University, and Rasmussen College. While the committee won’t investigate every for-profit school MPR reports that Globe University and the Minnesota School of Business are engaged in similar practices.

[The] allegations paint a picture of schools that target students eligible for subsidized loans and grants, but who have low prospects for academic success. They also raise questions about whether students at those schools — and the taxpayers who subsidize them — are getting their money’s worth.

Read For-profit Globe University’s recruitment, revenue tactics questioned [via Bob Collins]