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Update on Consumer and Civil Justice News

Happy holidays. With so many people on hiatus from last week until January 5, we thought a brief recap of some recent consumer and civil justice news might be useful:

  • CBS News legal analyst Andrew Cohen responded to an absurd proposal from the U.S. Chamber of Commerce to President-elect Obama: the way to get the country back on track economically is to exempt companies from legal liability. Cohen analogized this selfish and short-sighted appeal to "child who kills his parents and then begs for mercy because he is an orphan." I like to think of it as a drunk driver who gets pulled over and then suggests to the police that the best way to resolve the situation would be to give him his keys back and look the other way while he drives himself home. Cohen recognizes this shameless argument for what it is: nonsense.
  • Following the Fed 's recent enactment of new credit card rules, Sen. Robert Menendez (D-N.J.) called on lenders to comply with the reforms ASAP, rather than by the July 2010, date required by the rules. Other lawmakers have pledged to act quickly for more timely and comprehensive reforms. Last weekend, the New York Times editorialized that "promptly passing a credit card reform package" should be a priority for the next Congress.
  • Class action lawsuits have been useful to consumers challenging baseless early termination fees (ETFs) in cellular telephone contracts. A recent story in the Times reported on efforts by Sen. Herb Kohl (D-Wis.) to investigate rate setting for cell phone text messaging plans. Perhaps unsurprisingly, those rates appear to be as baseless as ETFs. In another similarity to ETFs, consumers have begun filing class actions over text messaging rates.
  • New America Foundation's blog has been following an old but infuriating story about a shady student lending practice in which lenders, like Ohio-based Key Bank, partner with unlicensed and unaccredited trade schools, disburse student loan money to the schools, and then refuse to discharge students of their debts when the schools go out of business. There is an FTC rule designed to protect students in these situations. One way that Key Bank has been evading the rule and other charges of unfairness over its practices is by including Binding Mandatory Arbitration clauses in the promissory notes. Key Bank insists that these are old cases, and it has ceased student loan operations (for the time being), but Key also received $2.5 billion from U.S. taxpayers (via the U.S. Treasury) as part of the bailout package.

Meanwhile, we must wait until after the New Year for word on a potential economic stimulus bill. Until this week, all signs seemed to indicate that authority for judges to modify mortgages would be included as part of the package. Now that congressional Republicans have indicated a willingness to drag their feet, the question appears to be not only whether the provision will be included in the stimulus, but also when the stimulus will be enacted.  Stay tuned.

Happy new year to all!

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Comments

CS

RE: "U.S. Chamber of Commerce to President-elect Obama: the way to get the country back on track economically is to exempt companies from legal liability." It seems like the outrageous, absurd requests big business asks of our govt would be rejected out of hand, for their audacity and gall...but nope, most of these requests will probably be accepted without any strings attached, just like bailouts, because these busineses are powerful lobbies in D.C. Disgusting.

Bob Henry

The Chamber of Commerce must think people are
totally ignorant to suggest businesses should be exempt from legal liability. It is time to swing the
pendulum back our way. Between credit card
companies, and so many businesses ripping
consumers off, forget legal liability, how about
some jail time, for some of these so called
proprietors. Three times this past month I have
found unauthorized charges on my card. One
explained, that because my wife had purchased
"easybakeware" she became a member of an
online shopping mall. The charge $14.95 a month.
Another case my wife purchased curtains at J.C.
Penny, a supposed reputable firm. All of a sudden
we get $9.95 monthly charge. Icontacted the firm
World entertainment in Texas. They explained that
when my wife purchased curtains at J.C. Penny, she
was entitled to a coupon. The coupon entitled us to belong to this travel club and the $9.95 was the
monthl fee. Businesses seem to just feel free to take your money, without even asking. This is a travesty
of justice and maybe the Chamber of Commerce needs
an ethics redo or just disappear. Suprisingly, 2 of the
3 companies belong to the "better business bureau".

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