Selected Lesser Grievances

There are lots of big issues facing the United States, the biggest of which is the existential threat to its continued functioning as a democracy posed by Donald Trump's candidacy in this year's Presidential election. And, this blog spends plenty of time thinking about those big issues.

But, the world is also full of things that aren't "big issues" but are minor annoyances and lesser grievances that it would be nice to see remedied, even if they aren't really make or break issues. This post recounts some of them.

Computer System Treatment Of Hyphenated Names And Similar Issues

* There ought to be a law that mandates that government and big business computer systems accommodate people who have hyphens, apostrophes, spaces, and just one or two characters in their names. This may have been an issue at the start of the computer age, but we have reached a point where it is no longer that hard to do.

Fraud

* We do a poor job of dealing with fraud perpetrated by phone, text message, email, social media, the Internet more generally, and the financial system. It should be possible to click a 9-1-1 style universal fraud reporting code and send reports of fraudulent activity instantly to the appropriate law enforcement agency and telecommunications providers, with no further effort from the person reporting it required. This should shut down the fraudster's phone number, and email accounts, social media accounts, and freeze any associated financial accounts almost instantly, and launch investigations as a matter of course into the perpetrators and into the institutions used by them to perpetrate the frauds. The cost of an individual fraudulent communication is small and the fraudsters count on that to shield them from investigations, which when they do happen aren't nimble enough to address it because the perpetrators are long gone. Yet, we have a system that is much better a dealing with the much less serious problem of copyright infringement than it is at dealing with fraud. 

* We should do a better job of dealing with deceptive business practices by credit reporting agencies that try to trick you into paying for services that they are required to provide for free.

* We should do a better job at shutting down businesses that dupe people into paying to get government services that are available cheaper or for free from the actual government.

* Credit cards should have PIN numbers the way that ATM cards do. This would dramatically reduce credit card fraud and reduce the incentive to steal credit cards.

* Food labeling should be more tightly regulated to discourage spurious and misleading health claims like "antibiotic free" in foods where antibiotics aren't allowed anyway, or claims that a food that ordinarily would have sugar but not fat anyway is "fat free".

Regulated Occupations

* We should have a central database of people who are sanctioned or "disbarred" from particular professions in a particular state or local jurisdictions, so that these people are prevented from going to some other state or local jurisdiction, or some other licensed occupation where the same conduct would also be disqualifying.

* The construction trades should be regulated at the state level, not the local level. This prevents an unreasonable barrier to entry for legitimate reputable construction contractors, which causes construction trade licensing to be ignored or overlooked, while also making it too easy for someone who has had their construction trade license rightfully revoked to just go to another locality that hasn't caught up with them yet.

Arrest Records

* We should also have a way of purging the official arrest records of people who are arrested or charged, but are ultimately not convicted of anything, from public records and databases (that do not at least disclose the exoneration with the arrest record report). Similarly, there should be a better process to purge or annotate criminal convictions that are vacated.

Mail, Package Delivery, And Porch Piracy

* The U.S. Postal System and all other package delivery firms should be liable for damages when it delivers a package to the wrong address (or doesn't deliver it at all), preventing the intended recipient from receiving it, even without requiring the sender to procure insurance, at least up to a certain dollar amount. 

* A parallel and similar system for dealing with fraud via mail to the one suggested above for telecommunications fraud should also be put in place. Violators (both firms and their managers and principals) should have their right to send mass mailings suspended for some period of time in addition to any other relief.

* A certain percentage of packages should have tracking chips that can be used to locate the packages if they are taken by porch pirates, allowing the perpetrators to be found, and creating too high of a risk for people contemplating porch piracy to consider doing so.

* Mutual funds should be required to make information about their funds publicly available, but mailing prospectus-like disclosure documents to their investors on a regular basis just kills trees without providing meaningful improvements in investor knowledge.

* The same is true of privacy policies. Require them to be made available in some standardized place, but don't mail them out to everyone connected to a business.

* Low advertiser postal rates for "junk mail" that don't reflect reduced costs for the postal system due to, e.g., pre-sorting, should be abolished and instead, all mail should have to pay first class mail rates. If it isn't worth sending a first class mail rates, it isn't worth bothering people with the unsolicited junk mail.

* Congressional franking privileges should be abolished and replaced with a budget for postage for each U.S. House and U.S. Senate office, based upon the population of the state in question for U.S. Senate offices. This privilege is widely abused by office holders and undermines the economic viability of the U.S. Postal Service.

* Mail-In Ballots should have business return postage type treatment so that the voters doesn't have to attack any postage to return their ballot through the mail, paid for by the governmental body conducting the election.

* Registered voters should indicate (in a database that is not public record at an individual level, just at a statistical level), their preferred language for election related information and communications. Thus, election related disclosures and ballots would go to voters only in their preferred language rather than in both English and Spanish with other language versions available upon request. This would make ballots more readable, and cut in half the amount of paper wasted in pre-election disclosures. It would also significantly reduce the burden on voters who need to receive translations into languages other than English or Spanish.

Long Ballots 

Ballots are too long, in part, because we have voters do too much. But long ballots discourage voting generally and lead to uninformed decision making.

* We should not elect, at any level coroners, surveyors, engineers, dog catchers, assessors, treasurers, clerks, or secretaries of state, who are supposed to be carrying out technocratic tasks with only limited discretion.

* Elections should not be administered by partisan elected officials, or by partisan political appointees.

* Judicial retention elections like the ones held in Colorado make ballots much longer (just short of half the questions on my ballot this year are judicial retention elections) and demand a great deal of effort from voters who try to make those decisions in an informed manner, but provide very little benefit. Typically only one or two judges in the entire state are not retained in any election cycle, and sometimes, none are. Only about 1% of judges are ever removed this way, which inadequate purges inadequate judges. And, a significant share of judges who are removed are removed for decisions that are legally required but unpopular. Simply put, the general voting public is ill-equipped to make this decision even with state supplied information pamphlets, and it is a great burden on voters that makes ballots too long. There might be a place for retention elections, but only in cases which are singled out as "high risk" in some reasonable manner, for the voting public to focus upon.

* In Colorado, the Taxpayer's Bill Of Rights, requires voters to approve tax increases and to authorize retention of revenues from existing taxes if those revenues grow fasters than a formula in the state constitution. I don't have a problem with the first kind of voting requirement for new taxes. But, votes on retention of revenues from existing taxes (called "debrucing" ballot issues, after Doug Bruce, the author of TABOR in Colorado) should not be required and make our ballots unnecessarily long.

* Similarly, while voters should have to authorize increased debt limits for local governments, they should not have to authorize incurring debt at levels previously authorized by voters and paid for with existing taxes, after the original debt is paid down, at least in part.

* The CU Board of Regents and the state school board, should not be chosen by the general public in elections, let alone, in partisan elections.

* Perhaps in addition to petitions to establish a minimum threshold of support for a ballot measure before putting it on the ballot for the general public to consider, citizen's initiatives should face a public opinion poll test and only be granted ballot access if it can garner at least, say, 35% support, in a public opinion poll conducted by a reputable and certified firm.

Notarization

* The requirement that statements made under penalty of perjury be presented in a notarized affidavit made under oath should be replaced with a rule allowing unnotarized declarations made under penalty of perjury in court documents, something that is already the case in the federal court system, and the court systems of Colorado and Utah, at least.

* Notarized but not otherwise witnessed wills are valid in Colorado. This should be the norm nationally.

Copyrights, Rights Of Publicity, And Privacy

Copyright laws are too strong for a digital age. Some examples:

* There should be more legally binding safe harbors for fair use. Far too many cases are in gray areas decided on a case by case basis by a particular judge and jury.

* Some version of a fair use defense or dramatic remedy limitation should be available in the cases where someone is sharing content made available by a copyright holder or a licensee for free on the Internet or via freely available broadcast television or radio.

* There should be a mechanism for mandatory licensing of orphan works and for translations of works that are not available in a particular language.

* There are overly expansive protections for derivative works in areas such a fan fiction that should be dialed back.

* Statutory damages in lieu of actual economic damages, and the availability of attorneys' fees in actions for copyright infringement, should also be greatly curtailed. In general, copyright remedies and rights should be closer to an unjust enrichment tort remedy and less like a property right. 

* Rights of publicity should be governed by a single, preclusive, federal law, not by a mishmash of state laws.

* Europe's General Data Protection Regulation (GDPR) is far too expansive and far too protective of privacy rights to the detriment of other legitimate interests.

* The scope of the applicability of the GDPR to people who are not in Europe, but can have dealings with Europeans over the Internet is far too unclear.

Traffic Laws

* Speed limits should reflect the speed that an ordinary reasonable driver would travel on a road as it is designed. Local governments should not be allowed to set lower speed limits than the road conditions reflect in response to local community pressure. If a local government wants traffic to move more slowly than the legally authorized speed limit given the road conditions, it needs to redesign the road, rather than just creating a speed trap.

* When push comes to shove, bicycles should be regulated as pedestrians not as motor vehicles. They should go on sidewalks and designated bike paths in most cases, rather than being expected to share designated highways and arterial streets with automobiles. A bicycle crashing into a pedestrian is much less serious than a car crashing into a bicycle.

Debt Collection

* It should be a serious offense to try to collect zombie debts that are barred by the statute of limitations or have been discharged in bankruptcy.

* It should be a serious offense to try to collect debts from the next of kin of debtors who have not guaranteed the debt in writing, rather than the decedent's probate estate.

Medical Billing

* Until the day when we have universal health care, health care providers to patients with health insurance should be forbidden from trying to collect their bills directly from the patient beyond a health insurance policy authorized co-pay to be paid at the time of service. Any provider that accepts any payment from that patient's health insurance should be required to honor the health insurance company's disallowance of their charges. And, health insurers should have to pay the full allowed charge to the health care provider and then collect the patient's share of that charge under the insurance policy from the patient. Patients shouldn't be put in the middle and as a guarantor in the face of disputes between health care providers and health insurers. A patient should be able to know exactly what he or she will owe simply by reading their health insurance policy.

* Emergency rooms shouldn't be allowed to charge more to someone who errantly went to an ER instead of an urgent care facility for the same services. The task of getting someone to the right level of care takes medical knowledge and should be the responsibility of the health care provider.

* Health care providers shouldn't be allowed to charge different rates for the same work done at a hospital affiliated facility (which is often billed at a higher rate) than at another facility.

* When there are contingent fee lawsuits for personal injuries, health care providers with health care liens on the recovery should have to share the risk in a way that afford the injured person some benefit of the lawsuit according to a standard formula that doesn't have to be negotiated on a case by case basis.

Court E-Filing Discrepancies

* Court E-Filing systems should have much less authority to just reject filings. Instead, if there is problem with the way that the filling was put into the e-filing system, that correction should just be made by the system, and if there is a problem with the document filed itself, it should issue an order to show cause directing the filer to correct it in a clearly described manner before a reasonable deadline to prevent it from being stricken with a loss of the original filing date.

Municipal Ordinances

* Municipalities and local governments should not be permitted to punish ordinance violations with incarceration or arrest. Incarceration should be limited to violations of state laws.

* Colorado should abolish municipal courts and require municipal ordinance violations to be enforced in civil actions brought by city attorneys in county courts that are part of the state court system.

President Biden's State Of The Union Policy Initiatives In A Nutshell

President Biden's State of the Union address this evening focused on a bipartisan bread and butter moderate agenda, as well as touting a great many of the successes he's had in the first two years of his term that haven't received much attention. Incidentally, his factual claims (especially of "good news" he takes credit for) faired well when subjected to fact checking, although who gets credit for good news is always a subjective matter to some extent.

Stripped of the anecdotes and themes ("finish the job"), as usual, there was a list of major policy initiatives for his next two years which he announced. 

I've reviewed the transcript of his speech and distilled those policy initiatives from it. Agenda items in a State of the Union address are much more likely to happen than policies merely mentioned in a political party platform in the United States.

Health Care

Cap the costs of insulin at $35 a month for all Americans, not just those on Medicare. Preserve recent ACA premium subsidies and expanded ACA Medicaid after 2025. Extend the Medicare Trust Fund by two decades. Increase access to home health care and support for family caregivers. 

End the pandemic public health emergency. Monitor new COVID variants and support new COVID vaccines. Greatly increase funding for cancer research.

Taxes And Public Finance

Increase taxes on those making more than $400K per year and corporations with a "billionaire minimum tax", a 4x tax on corporate stock buybacks and closing loopholes that the very wealthy used to avoid paying taxes. Restore the full child tax credit. 

Lift the debt ceiling. Cut the deficit by $2 trillion without cutting Medicare or Social Security. 

Business Regulation

Strengthen anti-trust legislation, prevent online platforms from giving their own products an unfair advantage. 

Stop big tech from collecting data on kids and teens and targeting advertisements at them. Impose stricter limits on the data big tech collects on everyone. 

Pass the Junk Fee Prevention Act limiting hotel surcharges, cable and cell phone company switching fees, concert and ticket service fees, and charging families to sit together on planes.

Worker's Rights And Economic Security

Pass the PRO Act to make it easier to unionize. Guarantee all workers a living wage. Give workers paid family and medical leave and affordable child care. Increase access to affordable and quality housing. 

Education

Provide preschool to 3- and 4- year olds. Give public school teachers a raise. Increase access to mental health care at school. Connect students to career opportunities in high school. 

Reduce student debt and increase Pell Grants for working and middle class families. Provide two years of community college. 

Veteran's Benefits

Provide veterans and their spouses with job training and placement upon reentry to civilian life. Provide rent so veterans don't become homeless. Reduce suicides by veterans.

Crime And Law Enforcement

Prosecute criminals who stole pandemic relief money. Triple anti-fraud "strike forces" going after them, double the statute of limitations on these crimes, and crack down on identity fraud by criminal syndicates.

Stop fentanyl production, sale and trafficking with greater enforcement including higher penalties for fentanyl trafficking, more resources for interdiction at the border, and by working with carriers like FedEx to inspect more packages for drugs.

Give law enforcement the training they need. Fund more first responders and other professionals to address substance abuse and mental health issues. Use more resources to reduce violent crime and gun crime such as more community intervention programs and more housing, education and job training. 

Hold police officers and departments that violate the public trust accountable. He's banned federal law enforcement officers from using chokeholds, restricting no knock warrants, and other key elements of the George Floyd Act that didn't pass and he wants to finish the job on police reform. 

Ban assault weapons.

Immigration

Reform immigration, if not with his comprehensive plan, at least with more equipment and officers at the border, and a path to citizenship for Dreamers, those on temporary status, farm workers, and essential workers.

Abortion, Gay Rights and Democracy

Codify Roe v. Wade. Pass the Equality Act to protect LGBTQ Americans, especially transgender young people.

Don't tolerate political violence. Protect the right to vote rather than suppressing it. Honor the results of our elections. Uphold the rule of law. Restore trust in our institutions of democracy. Give hate and extremism in any form no safe harbor.

Foreign Policy

The U.S. will stand with Ukraine as long as it takes. 

The U.S. will work for more freedom, more dignity, and more peace, not just in Europe, but everywhere.

Seek competition and not conflict with China and unite the U.S. to compete with it. Invest in industries that define the future that China wants to dominate. Work with allies to protect advanced technologies so they are not used against us. Modernize our military. Work with China to advance American interests and benefit the world. Protect the U.S. from Chinese threats to our country and sovereignty.

This Week's SCOTUS Rulings

* A cert grant regarding a suit against Google that relied on a subsequently overturned Court of Appeals decision was remanded. Cert was granted on the issue of whether a charitable gift that gave nothing to class members and resulted in an attorneys' fee award was proper in a suit over Google's failure to make statutorily required disclosures. But, the remand was on the issue of whether the class had standing to sue for Google's violation of the statute. The case the lower court relied upon for that proposition was reversed by SCOTUS on the grounds that not all violations of statutes sufficient to give rise to an Article III standing eligible injury. Frank v. Gaos, No. 17-961.

The case reveals, once again, the hostility of the Supreme Court to class action lawsuits. 

* SCOTUS holds that a law firm carrying out only non-judicial foreclosures in Colorado is not a debt collector for purposes of the fair debt collection act except for three narrow provisions related to non-judicial foreclosures. Obduskeyv. McCarthy & Holthus LLP, No. 17-1307.

This is contrary to the working understanding that firms that regularly engage in debt collection are debt collectors even if a substantial part of their work includes non-judicial foreclosures. The analysis is weak in too easily conceding that this law firm that does non-judicial foreclosures is not also more broadly a debt collector without more global analysis of the scope of the law firm's practice, and in its lack of analysis regarding the claim that a non-judicial foreclosure in Colorado which calls for a short court hearing, is truly non-judicial. This ruling comes on the heels of a SCOTUS ruling that a collection agency which buys a third-party's defaulted debt and then collects it on its own is also not within the scope of the Fair Debt Collection Practices Act. There is a parallel Colorado Act with the Colorado General Assembly could amend to address this issue.

* Product liability suits involving ships are subject to admiralty law, rather than state law in product liability lawsuits. At issue is whether the manufacturer is liable for failure to warn of a dangerous product used for its intended use under admiralty law when the dangerous part of the product is intended to be added by the consumer after purchase, rather than included in what is delivered by the manufacturer. In this case, it is asbestos that must be added by the consumer (the U.S. Navy) after delivery. SCOTUS holds that in these circumstances, there is a duty to warn. Air & Liquid Systems Corp. v. DeVries, No. 17-1104.

Since admiralty is a matter of federal common law, the Supreme Court has great discretion in how it resolves these cases (which honestly, don't come up very often).

* SCOTUS holds that an Indian tribe importing gasoline over public highways that cross Washington State via a company the is tribal owned to stores on a reservation is not subject to Washington State fuel taxes based upon the relevant treaty. Justice Gorsuch joined the four liberal justices in making this ruling. Washington State Dept. of Licensing v. Cougar Den, Inc., No. 16-1498.

The core issues appears to have been whether a treaty right to use public highways including a treaty right to transport goods across those highways to a reservation without subjecting the goods to taxation.

* U.S. immigration laws provide that if an immigrant is allegedly deportable due to a criminal conviction and falls into one of four categories, and is picked up directly from jail by immigration officials and placed in immigration custody that the immigrant must be detained indefinitely until a hearing is held. The immigrants in question would have been subject to this rule if they were immediately turned over to immigration officials, but were instead released and then apprehended by immigration officials. The statute that governs immigrants detained by immigration officials who are not turned over directly by jails or prisons to immigration custody entitles them to a pre-trial release hearing. SCOTUS holds that despite the plain language of the statute that the immigrants in question are not eligible for pre-trial release hearings and must be indefinitely detained until a hearing is held on the deportation merits. (A mootness issue related to the fact that some parties received relief or were deported before the case made it to SCOTUS and before a class was certified is dispensed with under the notion of an issue that would defy review for mootness if that rule was strictly applied.) Nielsen v. Preap, No. 16-1363.

This is a big deal, in part, because the speedy trial requirements of the 6th Amendment do not apply to deportation hearings which are chronically very, very behind schedule, which makes any kind of indefinite detention pending a deportation hearing problematic.  Kavanaugh concurs in an opinion noting the narrowness of the decision which does not, for example, address the legality of indefinite pre-trial detention in immigration proceedings in general (which was addressed in three prior SCOTUS cases). Thomas and Gorsuch concur to take the extreme position that immigration detention is not subject to judicial review. The four liberal justices dissent arguing that the distinction between immigrants immediately turned over and those who are detained later is meaningful and intended, because those detained later may have set down ties for years in the U.S. that make the harm of denying a hearing much greater than that of someone going directly from criminal incarceration to immigration detention.

Can Packaging Be Misleading If The Truth Is Disclosed In The Fine Print?

The United States Court of Appeals for the Second Circuit has held that a facially misleading statement on product packaging in large print can be misleading for purposes of consumer protection statutes even if government mandated fine print labels reveal the truth.

The fascinating issue presented elucidates just what consumer fraud means. The analysis made in a manner conscious of the rulings practical implications is a sound one.

Heath Insurance Companies Still Evil

The latest health insurance abuse involves Anthem (i.e. Blue Cross, Blue Shield) which is denying coverage for ER visits that after the fact produce a diagnosis that is not an emergency, even though the symptoms that led someone to go to the ER could have been consistent with a life threatening emergency condition in the eyes of a reasonable non-medical professional patient.

CFPB Bars Bans On Class Actions In Consumer Financial Products Arbitration Agreements

Administration efforts to stop new regulations promulgated under the Obama Administration failed to stop a major new Consumer Financial Protection Board regulations limiting arbitration clauses. It also requires disclosures about consumer financial products arbitrations to be shared with the CFPB.

Today the Consumer Financial Protection Board issued its final rule on arbitration agreements. Here’s the full 775-page document (the text of the regulation itself begins at p.747). 

From the summary: 

First, the final rule prohibits covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action concerning the covered consumer financial product or service. Second, the final rule requires covered providers that are involved in an arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the Bureau and also to submit specified court records. The Bureau is also adopting official interpretations to the regulation.

From the Civil Procedure and Federal Courts blog on Monday, July 10, 2017.

Harsh Rulings From SCOTUS

* The U.S. Supreme Court has previously held that life without possibility of parole sentences for a rape committed by a juvenile are not permitted. But, it concluded per curiam in Virginia v. LeBlanc that habeas corpus review was not available in such as case when the sentence was only life with possibility of "geriatric release" finding that this was not an objectively unreasonable reading of its ruling by the Virginia Supreme Court. In all likelihood, however, SCOTUS will hold in the proper case that this sentence is unconstitutional, but people with existing sentences will be hard pressed to benefit and will languish in the meantime.

* In Henson v. Santander Consumer USA Inc., SCOTUS gutted the Fair Debt Collection Practices Act by holding that firms that purchase defaulted debts for collection are not subject to the Act. This unanimous ruling is the first written by new Justice Neil M. Gorsuch and reflects a crabbed method of interpreting statutes that focuses on their literal wording rather than their intent, putting form over substance (since a sale of a defaulted debt for collection is for all purposes relevant to the FDCA economically equivalent to collecting debt for a third party).

The background to the grant of certiorari illustrates why the Court's unanimous conclusion was far from a foregone conclusion. As the headings in the Petition for Certiorari explain, the Circuit Courts of Appeal were quite evenly split on this issue and the U.S. Supreme Court adopted the minority rule (incidentally, affirming the much maligned 9th Circuit's position):

There Is A 5-3 Conflict Over Whether Collectors Of Purchased Defaulted Debt Are “Debt Collectors” Under The FDCPA. The Third, Fifth, Sixth, And Seventh Circuits, And The District of Columbia Court of Appeals, Hold That Collectors Of Purchased Defaulted Debt Are Debt Collectors Within The Meaning Of The FDCPA. The Fourth, Ninth, And Eleventh Circuits Reject The Majority Rule.

The majority view was also the interpretation of the Act made by the federal agencies charged with enforcing the law:

As originally enacted, the FDCPA authorized the Federal Trade Commission to “enforce compliance with” the Act, using its powers under the Federal Trade Commission Act. See 15 U.S.C. § 1692l(a). As part of the Consumer Financial Protection Act of 2010, the Consumer Financial Protection Bureau was also given overlapping enforcement authority with 27 respect to non-bank financial institutions. See id. § 1692l(b)(6). These two agencies and the Solicitor General have consistently construed the FDCPA to apply to purchasers of defaulted debt. 

* In Microsoft Corp. v. Baker, the Court narrowed the availability of the class action remedy by eliminating the right of a class to appeal on an interlocutory basis the denial of class action status, when all of the named Plaintiffs settle, or voluntarily dismiss with prejudice, their cases. This unanimous decision reflects longstanding hostility towards class-action lawsuits by the Supreme Court.

* In Sessions v. Morales-Santana, the Court agrees that the gender discrimination between the citizenship requirements for children with U.S. fathers born outside the U.S. and for children with U.S. mothers born outside the U.S. is improper. But, rather than following the nearly universal rule of leniency in such acses, it adopts the harsher rule applicable to U.S. fathers (prospectively) for mothers while leaving the rule for fathers unchanged, denies the party claiming U.S. citizenship relief, and exhorts Congress to rewrite the law. The decision was unanimous.

* In Sandoz Inc. v. Amgen Inc., the U.S. Supreme Court once again rebuffs the Federal Circuit on a patent law issue related to patent claims in products (basically drugs) biologically similar to products subject to an existing patent. If the inventor of the biosimilar product doesn't have the cooperation the the inventor of the original product, the original product owner may immediately sue for patent infringement. In this case two points were at issue. First, could the new applicant give an FDA required notice before it had its license to sell the product in hand, thereby avoiding a six month waiting period during which the old product owner would have a monopoly. The Federal Circuit held that notice could not be given in advance and the U.S. Supreme Court disagreed, eliminating a six month waiting period for newly approved products going to market. Secondly, it wasn't clear if an injunction against selling the product pending litigation was available in lieu of the waiting period. The U.S. Supreme Court held that an injunction justified by state but not federal law could be available even though the Federal Circuit had held that all state law claims were pre-empted. Overall, the case was a slight win for companies wanting to introduce new biosimilar drugs to the market and a slight loss for companies with existing drug patents whose protection against biosimilar competitors was weakened. This follows the general trend of recent patent holdings of weakening court created protections for existing patent holders (which one would expect the Federal Circuit to create due to industry capture). The decision was unanimous. This is the sixth federal circuit reversal on a patent issue this session of the U.S. Supreme Court, and was a narrow opinion avoiding many of the issues presented.

In addition to these ruling the high court granted cert in yet another patent law case involving the process for reviewing already issued patents.

Wells Fargo Bank Still Violently Anti-Consumer And Crooked

Consumer arbitration is always a scam, but this one is particularly noteworthy, because the company claims the consumers are bound by agreements signed with signatures forged by the company. 

If there is any way that you can avoid doing business with this dishonest bank, you should take advantage of it and move your accounts immediately.

Even though disgraced Wells Fargo CEO John Stumpf has left the building, his most outrageous legal theories live on: on Wednesday, the company filed a motion in a federal court in Utah seeking dismissal of a class action suit by the customers it defrauded -- the bank argues that since customers sign a binding arbitration "agreement" when they open new accounts, that the customers whose signatures were forged on fraudulent new accounts should be subject to this agreement and denied a day in court.

This is the same argument that Stumpf made during his disastrous performance in front of a blazing Elizabeth Warren -- that Wells's poor customers should be subjected to agreements they never made, because Wells stole their identities and "agreed" on their behalf.

From here.

Consumer Debt Collection In State Courts

Lawsuits collecting small debts from consumer debtors, evicting residential tenants who fail to pay rent, establishing tax liens for individual taxpayers who don't pay what they owe, and foreclosing upon unpaid residential mortgage debts are the predominant share of the court docket on the civil side of every state court system. But, despite this fact, surprisingly little is known about how these cases are handled in the courts. We do know, however, that few of these cases are litigated on the merits and that when defendants do appear in court, they often do so without counsel.  

Virginia, with a population of about seven million, has averaged more than a million civil filings a year since the late 1980s. The overwhelming majority of these filings seek to collect debts from consumers, and most judgments go unpaid. 

Despite this apparent insolvency, civil litigation appears to be only tenuously related to consumer bankruptcy whether one looks at Virginia or at the nation as a whole. Nationally, the non-business bankruptcy filing rate rose by more than 350% between 1980 and 2002, while the civil filing rate rose by about 12%. Prior research suggests that relatively few bankrupt debtors have been sued by their creditors in state court, that most bankrupt debtors are drawn from the middle class, and that bankrupt debtors own homes at nearly the same rate as the general population. 

This Article finds that few civil defendants file for bankruptcy, that civil litigation is concentrated in cities and counties with lower socioeconomic characteristics, and that civil defendants in Virginia have a significantly lower rate of homeownership than the general population. In other words, the bankruptcy statistics exclude many defaulting and insolvent consumers, and these consumers may be disproportionately drawn from the more disadvantaged segments of society.

Richard M. Hynes, "Broke But Not Bankrupt: Consumer Debt Collection In State Courts" 60 Florida L. Review 1 (2008) (emphasis added).

It is commonly assumed that the typical person who files for bankruptcy does so because they are overwhelmed with state court judgments that they can't pay.  But, by and large, this is not the case. Bankruptcy is largely the province of the insolvent middle class. State court judgments are largely the province of the uncollectible poor and the solvent middle class.  The two worlds barely intersect.

There is not an empirical consensus on how these cases are processed, although it is clear  that few are ever tried on the merits, let alone before a jury as many state court rules allow. One low end estimate is that just 40% of limited jurisdiction court debt collection cases default, although many are dismissed voluntarily or involuntarily without prejudice, sometimes for lack of service of process, and sometimes due to a deal with the debtor to make payments which are often reached after a debtor appears in court with or without filing a responsive pleading.  An industry source estimates that 80% of such cases default and a Federal Trade Commission estimate that 90% of such cases default which would be closer to my estimation.

Institutional creditors such as credit card companies and payday lenders file collections lawsuits in a surprisingly low percentage of their bad debt cases, and it is surprisingly rare for multiple suits to be filed against the same debtor by different creditors in state courts.  But, the fact that such a large share of judgments go unsatisfied helps explain this reluctance.

Also about 80% of post-judgment litigation involves the filing of garnishments. Interrogatories addressed to debtors, enforcement of judgment liens in real property, and seizures of tangible personal property from debtors are far less common.

In the case of judgment liens in real property, many debtors sued in state court don't have any real property that is not fully protected by a homestead exemption, and even when they do, there is usually a first mortgage that must be assumed if the judgment lien is enforced, so it is easier to simply wait until the home is sold voluntarily to collect the debt.

A Modest Proposal For Health Care Economics

A committee in the Colorado House of Representatives has passed a bill, on a narrow party line vote, that would require stand alone ERs to disclose their charges so that people utilizing a stand alone ER as opposed to an urgent care facility where charges are much lower for the same treatment, make an informed choice.

I would like to see a law that would make disclosure of all health care provider charges with and without insurance, before providing treatment, and condition precedent to collection of such charges. 

There could be an exception if the patient was incapable due to a health condition of comprehending the charges and there was no other responsible person to whom disclosure could be made who could be located before treatment was necessary, in which case only the average amount paid for insured patients could be charged.

One of the biggest problems with health care economics is that there is rarely meaningful disclosure of prices in the industry, which renders impotent the market forces that usually control prices through competition.  There is really no other industry in the U.S. economy that I can think of which operates in this way (e.g. while lawyers aren't required to provide firm estimates of the total charges in advance, they are at least required to disclose their hourly rates and any standard additional charges to clients in advance as a matter of professional ethics and are also subject to reasonableness requirements that are not infrequently enforce by the courts).

This consumer protection reform would be a good first step towards putting the health care industry on an economic footing that even remotely resembles a rational one.  As it is, there is no real rhyme or reason for the charges for particular health care services in the absence of binding health insurance contracts between insurance companies and their provider networks.

Speed Reading Claims Are False

A good summary of the evidence that many common speed reading claims are false can be found here.

Consumer Arbitration Really Is Unfair

The New York Times is running a series on the problems with arbitration, particularly consumer arbitration clauses in take it or leave it contracts of adhesion.

Part I

Part II

Part III

I'll fill out this post at a later date with some of the details of why its indictment of consumer arbitration is correct.  Previous posts at this blog on the subject can be located via the Arbitration tag. The CFPB, a new federal agency, is considering regulations banning or restricting the practice.  A number of major providers of consumer arbitration ceased to provide the service within the past few years.

The stories are effective because mandatory pre-dispute arbitration fundamentally conflicts with a variety of widespread norms held by participants in the community subject to arbitration over their rights in the transactions they enter into and their reasonable expectations of fairness.

There are isolated contexts where it can make sense, such as in business to business transactions where privacy and a swift resolution are imperative, and in business to business transactions in which large numbers of cases, none precedent setting, between entities are likely (e.g. resolution of fee disputes between realtors who are part of the National Association of Realtors over who gets what share of a real estate commission).

But, routine disputes between credit card companies, cable companies, cell phone companies, and the like, over systemic mistreatment of large numbers of similarly situated consumers are not benign and encourage dishonest business practices by large companies.

UPDATE November 5, 2015: Law professor Stephen Carter writing an opinion piece for Bloomberg offers a rather unpersuasive rebuttal to the New York Times account of consumer arbitration clauses discussed above.

As someone who actually represents parties on a fairly regular basis in cases that involve, or could involve, commercial arbitration, and who drafts contracts and evaluates contracts for clients, I should also put on my "to do" list comparison of most material differences between a court forum and an arbitration forum.

For example, privacy, rules of evidence, discovery, speed of litigation, limitations on injunctive relief, and the availability of appeals.  The particulars of these differences are often different for major arbitration forums, for example, the American Arbitration Association and the Judicial Arbiter Group, and a significant minority of arbitration clauses call for arbitration of very narrow issues without specifying any widely adopted set of arbitration rules.  Also, even within AAA arbitration rules, for example, there are actually several different sets of rules for different kinds of disputes.

There are some respects in which arbitration can be a superior forum for certain kinds of disputes, and in other respects arbitration can be profoundly inferior for many kinds of disputes.

In general, for example, the looser rules of evidence that apply in arbitration causes under AAA commercial arbitration rules, tend to be a positive difference between an arbitration forum for commercial cases, and a court forum for commercial cases using evidence rules largely designed in the first instance for criminal cases and applied more generally to all civil cases even though the justifications for them in commercial cases tried to a judge are far less compelling.

On the other hand, it is rare indeed that the near universal absence of appellate relief for a bad decision made in an arbitration forum is a good one, except in very simple, small stakes cases between repeat players with comparable power in the institutions that conduct the arbitrations. In those cases, the law of averages mitigates the harm caused by individual erroneous decisions on any given litigant over time, and the benefits of rapid dispute resolution and reduced costs that flow from a lack of appellate review outweigh the harms caused by a lack of appellate review in any individual wrongfully decided cases within a pool of cases. There may be a place for a lack of meaningful appellate review, for example, in fee disputes between Realtors involved in the same real estate transaction, or between banks resolving disputes over check payment snafus.

But, a lack of meaningful appellate relief is almost never fair to a litigant in a high stakes dispute who is a one time player or will only litigate in that forum a very small number of times.  The lack of meaningful appellate review of arbitration awards in these circumstances fundamentally undermines the rule of law.

In a significant class of disputes for which arbitration is often appropriate, privacy and freedom from government involvement in dispute resolution, are important motives for choosing this forum.  For example, arbitration is frequently a desirable forum for trade secret disputes.  But, bifurcation that allows some relief to be sought in the courts while limiting other relief to arbitration forums can undermine the argument for arbitration in these cases, as can the important harm caused by removing precedents that would have been valuable to litigants in future disputes from the public domain.

Filing fees in arbitration cases are universally much higher than the filing fees in comparable cases in the Court system.  These fees buy, in part, a significantly faster time from filing to resolution in most arbitration cases.  This is partially a procedural issue, and partially a product of an intense scarcity of judges in the vast majority of U.S. courts with jurisdiction over civil actions. But, generally speaking, the amount of attorneys' fees involved in litigating a dispute through arbitration is not materially lower than the attorneys' fees that would have been incurred litigating the same case in the ordinary court system.

Empirical evidence also tends to show rather powerfully, that arbitration forums in which a repeat player (typically a big business) imposes an arbitration forum on an infrequently litigant such as a consumer or employee, show a pronounced bias, relative to the Court system, in favor of the repeat litigant who had the economic power to chose the arbitration forum.

As another example, the arbitration forum is often chosen primarily to defeat the possibility of obtaining vindication through class action litigation, or to deny a litigant substantive remedies (e.g., exemplary damages may not be awarded in arbitration forums in Colorado).  In these circumstances, the appropriateness of using an arbitration clause to secure these benefits is almost always deeply problematic.

Ultimately, however, the ninety year old Federal Arbitration Act tips the balance far too strongly in favor of arbitration and does the nation a deep disservice in the process.  The scope of circumstances in which arbitration is appropriate (and a respectable share of cases that I handle in arbitration are of that type), is, however, far greater than the scope of circumstances where the FAA mandates an extremely strong policy in favor of binding pre-dispute arbitration clauses,

79% of Major Brand Herbal Supplements Don't Contain The Herbs They're Selling

Forbes recaps the story.

While few of the supplements are effective in clinical studies, part of the problem may be that the supplements that are sold don't actually contain any of the primary ingredients.  The entire industry is absolutely rotten with pure fraud and the CEOs of the respective companies, as well as everyone else involved, belongs in prison for fraud for long terms.

Republican Senator Orrin Hatch, who has been the guardian angel of these companies in Congress, also deserved some of the blame.

A summary of the findings by the New York attorney general's office's testing:

• GNC’s “Herbal Plus” supplements: ginkgo biloba, St. John’s wort, ginseng, garlic, echinacea, and saw palmetto were tested. Garlic was the only one that consistently contained what the label indicated. One out of four bottles of saw palmetto tested positive, and none of the other four supplements contained the labeled herb. . . .
• Target's “Up & Up” supplements: gingko biloba, St. John’s wort, Valerian root, garlic, echinacea, and saw palmetto were tested. Three supplements–garlic, saw palmetto, and echinacea–contained what they were supposed to. The other three had no DNA at all from the labeled ingredient. . . .
• Walgreens “Finest Nutrition” supplements: ginkgo biloba, St. John’s wort, ginseng, garlic, echinacea, and saw palmetto were tested. Only one of these, saw palmetto, consistently contained its labeled ingredient. One sample of garlic actually contained garlic, and none of the other samples contained any DNA from the labeled ingredient. . . . 
• Walmart’s “Spring Valley” supplements: ginkgo biloba, St. John’s wort, ginseng, garlic, echinacea, saw palmetto were tested. Walmart had the worst results: of 90 DNA tests on 18 bottles, only 4% found any DNA from the labeled ingredient. Only one bottle of garlic and one bottle of saw palmetto contained what they were supposed to.

None of the gingko biloba, Valerian root, St. John's wort, or ginseng in any of the brands at major national retailers contained the ingredients claimed.

The Geography Of Bad Consumer Debt

The problem of people who don't or can't pay their consumer debts is ubiquitous.

About 94% of all census tracts in the United States (which average about 4,000 people each), have someone living there with a credit report indicating that they are 30 days or more overdue on one of their currently outstanding non-mortgage consumer debts (i.e. they have "bad debts").  And, 99.99% of census tracts have someone living there who has had a debt referred to collections in the last seven years for a non-mortgage consumer debt (i.e. they have "been referred to collections").

The two groups, unsurprisingly, overlap.  About 79% of people with bad debts have been referred to collections at some point in the past seven years.  About 11% of people with credit reports don't have any debts (like a mortgage or credit card debts or a car loan or a student loan) of a type that would ordinarily be reported to a credit reporting agency, but have had some other debt (like an unpaid utility bill or medical bill) that has been reported to collections, causing a file to be established with a credit reporting agency.

Geographic Trends

But, there is wide regional variation within the United States in the amount of bad debt outstanding and of the percentage of people that have been referred to collections.

The Geography Bad Debt

In the 1% of census tracts with the highest percentage of people with bad debts, 40% of which are in Texas or Louisiana, 15% or more of people with credit reports have bad debt (about 0.05% have more than 25%).

Across the 50 states and Washington, DC, three states have less than 4 percent of the credit file population with debt past due: Utah, Washington, and New Jersey. Three states have more than 7 percent of their credit file population with debt past due: Louisiana, Texas, and Mississippi.

Across the largest 100 metropolitan statistical areas (MSAs), Salt Lake City, Utah, has the lowest fraction of people with debt past due reported at 3.2 percent (appendix table A.2), followed by San Jose, California, and Seattle, Washington, at 3.5 percent. Some Texas and Louisiana MSAs are at the other end of the spectrum. In McAllen, Texas, 10.1 percent of people with credit files have debt past due reported; in El Paso, Texas, San Antonio, Texas, Baton Rouge, Louisiana, and New Orleans, Louisiana, approximately 9 percent of people with credit files have debt past due reported.

The Geography of Debts Referred To Collections

In the 1% of census tracts with the highest percentage of people who have been referred to collections, 75% of people with credit reports have been referred to collections.  Most of those census tracts are in the South or Appalachia.

Nevada . . . tops the list . . . 47 percent of people with a credit file have reported debt in collections. The District of Columbia and an additional 12 states (11 in the South) are over the 40 percent mark: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, New Mexico, North Carolina, South Carolina, Texas, and West Virginia.

At the low end are three Midwestern states— Minnesota, North Dakota, and South Dakota—which have a substantially lower, yet still considerable, 20 percent of people with reported debt in collections.

How Much Is At Stake?

The amounts of unpaid debts in these cases is usually quite modest.

The average amount of money that a person with bad debt must pay to be brought current is $2,258 (the median amount is $651).

The average amount of a debt referred to collections is $5,178 (the median amount is $1,349) and shows only modest regional variation, with the Southern states that have the highest rates of debts referred to collections tending to have small amounts owed.

Why?

Not Household Income

Variation in household income is only weakly correlated with bad debt rates, accounting for only 9% of the observed variation in the percentage of people with bad debt and only about 1% of the variation in the amount of bad debt owed by people who have bad debts.

The quite modest median dollar amounts of the bad debts and debts referred to collection relative to household income, and the only modest correlations between bad debt rates and household income, suggest that economic stress is not the predominant source of the regional differences in bad debt rates.  Average difference of a few hundred dollars in consumer debt financed debt spending, or personal consumption spending of people with consumer debt, would make a very large difference in the percentage of people with bad debt in any given place, since the median amount of bad debt is so modest.

Race Is A Minor Factor

At first blush, race looks like it could be a significant fact, and it probably has a statistically significant correlation.  The South, which has the most bad debt, also has a much larger African-American population than the rest of the United States.  But, upon closer examination, race appears to be a fairly modest issue.

While many places with high rates of bad debt and debt referred to collections have large African-American populations.  Others, like West Virginia, Texas and Nevada do not have particularly large African American populations.  Many of the states with very low and very high rates of bad debt have very small Hispanic populations.  And, states at any given band of rates of bad debt and debts referred to collection have wide variations in the size of their Hispanic and their combined black and Hispanic populations.

This impressions is reinforced when looking at more targeted metropolitan area statistics.  Many poor, depressed Rust Belt cities with large African-American populations have relatively modest bad debt rates and rates of debts referred to collection, compared to more prosperous metropolitan areas in the South with similar demographics.  If rate (or unemployment rates which are strongly correlated with race) were driving the disparities, one would expect these places to have similar rates of bad debt, instead of quite different rates.

Instead, Detroit, which is overwhelmingly African-American, has considerably low rates of cases referred to collection than, for example, Houston or Dallas.

The Housing Bubble Looks Unlikely As A Factor

Nevada and Florida, which were among the states hardest hit by the housing bubble collapse, has a very high rate of debts referred to collection.  But, California, which was also severely hit by it, does not.  And, Texas, which was largely spared, also does not.

Other Possible Causes

There are at least two other kinds possible causes look more plausible.

* State Level Legal Differences That Vary By Region

One possible source for the regional variation has legal sources.

Many states with high rates of bad debts and debts referred to collections also have generous laws protecting property from being collected by creditors, while regions with low rates of bad debts and debt referred to collections.  Texas and Florida, for example, have generous homestead exemptions that protect virtually all real estate equity from the claims of consumer debt creditors.

Also, while average household income isn't strongly correlated with bad debt, the federal bankruptcy protection means test for obtaining a Chapter 7 liquidation in bankruptcy without a payment plan is much more strict in many of the states with high rates of bad debt.

For example, states with high rates of bad debt also typically regulate consumer finance and debt collection less aggressively, have much more regressive state and local tax systems, have less generous social safety net programs, and impose more civil disabilities on people with criminal records.  All of these policy differences could translate into more bad debt.

* Regional Housing Prices

States with high average levels of mortgage debt have lower average levels of non-mortgage consumer debt, and visa versa.  And, this may be one of several relevant factors.

High levels of consumer debt may in places with high bad debt levels may arise because people make more debt financed consumer purchases because they have more money left over after paying their housing expenses.  People who have less consumer debt are less likely to have bad debt.  And, in some places, debt financed consumer spending is less common because everyone had less non-housing money to spend on consumer goods.  For example, people in New York City tend to spend far less on debt financed automobile purchases and far more on rent than people in Texas.

The problem with this explanation, however, is that it fails to explain low rates of bad debt in the Midwest and Plains states where housing is often dirt cheap relative to household incomes.

* Culture May Drive Regional Differences

Many of the areas with high rates of bad debts and debts referred to collection are also places immersed in Southern culture and Evangelical religious beliefs.  This is a culture that emphasizes that people sin and are forgiven, and emphasize God's providence in times when there seems to be no hope, while their Protestant peers in the North tend to place more emphasis culturally, on thrift and on not sinning in the first place and less on forgiveness.  A common translation of the Lord's Prayer in much of the North refers not to people "who trespass" and "trespasses" but to "debtors" and "debts."

It is entirely possible that social norms about the importance of paying one's debts are simply stronger in the North than in the South, and indeed, that differences in the relevant laws between these regions reflect these different attitudes.  The relatively homogeneous trend across the Southern cultural area, and the fact that some Northern States with generous exemptions from creditors (like Minnesota) still have low rates of bad debt, tend to favor this explanation.  The stark disparity between neighboring Nevada and Utah, despite the fact that the state's neighbor each other and actually have quite similar laws on many relevant topics, similarly favor a explanation for the geography of bad debt based upon regional cultural differences.

The Legal Process

The courts of limited jurisdiction where these claims are adjudicated have massive case loads, have loose procedural rules with little pretrial structure, receive little political attention, go largely unnoticed by the media, and adjudicate the vast majority of claims by default or by settlement.

Notably, in collections cases, getting a money judgment from a court is often of only minor relevance to collection success, as finding a source of payment is often the real issue.  And, often, there are rights to repossess property or a security deposit, pursue an insurance claim, harm a person's credit rating, or to refuse to do further business with a consumer (a particularly powerful option in the case of a monopoly like a utility company) that provide remedies for creditors beyond those that a money judgment from a court can offer,  In contrast, it is impossible to get divorced or to conclude a criminal prosecution, for example, without court involvement.

In limited jurisdiction court collection cases, creditors are usually represented by collection agency lawyers who mass produce cases, while debtors are almost always unrepresented since the cost of a lawyer and unlikely prospects of reducing their obligations by paying their own lawyer plus the fees to which a collections lawyer is legally entitled if a collections lawsuit drives up the collection's lawyers' fees when contested, rarely justifies the amount of money judgment reduced through litigation in these cases.  Politically, this means that creditors through their attorneys' have a core of full time professional advocates who may seek political action, while consumer debtors have no similar core of professionals protecting their interests in the courts or in the legislature.

Then again, limited jurisdiction courts offer justice that consumer debtors can afford, are often much more affordable than options like consumer arbitration, and are more management for pro se parties (i.e. people without lawyers) to navigate than general jurisdiction courts that handle bigger disputes.

And, for someone who rents and doesn't have much property subject to creditor's claims other than their wages, the worse case scenario in a court of limited jurisdiction, compared to the outcome that would happen if a lawyer negotiated the claims and litigated, is often not that much different (something that is very much not the case when large debts, often of a business nature, are litigated in general jurisdiction courts and huge concessions can often be secured).  Typically, in large dollar debt collections, the biggest concern is about a loss of asset value due to a fire sale of assets in the collection process, something that is far less of a concern when wage and bank account garnishments are the primary remedies.

Relief from various enforcement approaches is often handled by negotiation rather than as a matter of legal right that a court outside of a federal court bankruptcy system can confer, in any case.

Also, often the problem faced by a consumer debtor is an inability to pay a debt, rather than a material dispute over whether most of it is owed.  In those cases, the end run of bankruptcy court, where consumers are often represented efficiently and inexpensively by lawyers who mass produce consumer bankruptcy cases with heavy paralegal involvement provide a more efficient solution than litigation of individual claims on the merits of the debt in limited jurisdiction courts.

Political Considerations

Partisan considerations aside, policies impacting bad debt and debt collection have broad impact.  Nationally, 35% of people with credit reports have been referred to collections within the last seven years.  Bad debt is also an important issue for almost every business and financial institution involved in extending consumer credit.  Of course, people with a stake in businesses collecting their debts tend to be reliable voters who can donate some money to political campaigns.  They also have an ongoing stake in the issue as repeat players in this legal arena and the wherewithal to do something about it politically, something that stressed consumer debts rarely have available to them.

Only about 3% of people resort to payday loans or pawn loans in a given year, and only a modest share of people who are referred to collections go bankrupt.  So, policies regulating the collections process and consumer finance outside of bankruptcy have wide impact.

It is also not too surprising that pro-debtor legislation like the bankruptcy code and fair debt collection practices act, tends to be federal, since voter turnout in federal elections is higher, while pro-creditor legislation tends to be enacted at the state level where voter turnout is lower.

On the other hand, the number of consumer debtors who have experienced the collections process first hand as debtors vastly outnumbers the number who have experienced it from a creditor's perspective.  And, while consumer debts in the collections process tend to be working class or middle middle class, about 20% of the adult population, mostly those with too few assets and too little income to get credit, don't participate in the consumer finance economy at all.  So, consumer debtors with bad debt are not the most politically vulnerable people in the electorate either.

While the Republican party espouses a pro-business orientation, bad debt, and the need to refer debts to collections, is clearly not something that businesses like to experience.  Consumers obviously, don't like to struggle with their debts either.

States with higher than average rates of bad debt and referrals of debts to collections, are overwhelmingly Red States.  States where bad debt is less common strongly tend to be blue states.  On the other hand, it isn't clear that politicians of either party really understand which policies most strongly influence this process or what kind of influence those policies have.  For example, for the most part, exemption from creditor laws are static with little legislative action from either party away from status quo positions set often many decades in the past.

Of course, if bad debt and referral to collections rates are more a product of cultural norms than legal rules, then maybe legislative action is irrelevant.

Sources

All statistics in this post not otherwise sourced come from a July 29, 2014 study by the Urban Institute of the TransUnion credit reporting database (TransUnion is one of the three dominant credit reporting agencies in the United States).

Misleading Ads And Crazy Schemes

The problems are as old as time.  People making misleading statements to secure people's money, and people trying to get people's money with crazy or ill advised ventures and opportunities.  A patchwork of laws regulate this conduct, but not terribly effectively.

Who are some of the most recent offenders that have assaulted my ears and eyes?

* Recent radio advertisements for programs claiming to teach you how to fix and flip houses, and how to profit from investments in property tax liens, are grossly misleading or outright false, dramatically overestimating likely returns, and underestimating the risks and investments of time and talent that are required.  If they were selling the investments themselves, these advertisements would constitute illegal and actionable securities fraud, but because they are merely selling overpriced educational programs instead, they aren't "securities" and can get away with making these false claims (although these advertisements are still probably "deceptive trade practices" which are actionable under the Colorado Consumer Protection Act).

* Western International University, which is a for profit private educational higher educational institution targeted at working, non-traditional students, mostly in a remote education format, based in Phoenix, Arizona, is currently running a radio campaign lauding the benefits of faculty led 10 minute classes which argue that adults have trouble retaining anything longer.  I would suggest that people who can't retain information from a presentation longer than 10 minutes really shouldn't be seeking degrees at all.  It's classes are eight weeks long.

Most of the higher educational institutions that advertise on the radio are for profit institutions that, while accredited, have high tuition, low retention and graduate rates, poor rates of career success for graduates, and poor reputations.  They minimize professor pay, spend a great deal of their revenues on marketing and sales functions, generally don't have tenured faculty, and rely on federal Pell Grants and federally subsidized student loans for the bulk of the funds that they receive to bring in revenues.  Default rates on the student loans incurred at these institutions are generally much higher than public and non-profit higher educational institutions.

For example, in the 2011-2012 year, Western International University had 4,696 students enrolled (89% online), but only 98 were first time, full time students enrolled in bachelor's degree programs.  Only 21 of those were still enrolled a year later (a 78.6% dropout rate in the first year alone), and only 4% of first-time, full time students graduate in 3 years for associate degree programs or 6 years for bachelor's degree programs.  None of the 50 students who were black, Hispanic, Native American, or identified with "two or more races", or non-resident aliens graduated, 5% of white students graduated (3 out of 61), and 2 out of 12 students who declined to identify their race or ethnicity graduated.  There were no Asian or Pacific Islander students enrolled there on a first time, full time basis.  Apparently, about 10% of part-time or not first-time students earn a certificate or degree of some kind each year although the website isn't very forthcoming on this point.

Online tuition is $6,072 per year for undergraduates and $8,592 for graduate students, and is $11,112 per year for undergraduates and $15,336 a year for the small number of "ground campus" students.

Like the institution where I was a professor for a while, the College For Financial Planning, it is a sister college of the University of Phoenix and is owned by the Apollo Group (whose Horatio Alger story billionaire founder died in his 90s this week).

* College America's pitch is the abundance of big scholarships that they offer, more of less indiscriminately, which is simply a matter of offering everyone or almost everyone a scholarship and inflating its tuition by the same amount.  Like Western International University and most other for profit colleges, however, they are a very poor value.  A state college or community college is almost always a better value, and community colleges and some state colleges, like Metro in Denver, admit pretty much anyone who has completed high school or a GED and has the slightest prayer of not flunking out when faced with college level material.

* Radio campaigns (often for hair products or skin products) that claim that free offers are available only if you call in an order within the next ten minutes or half an hour, when in reality, the company has no idea when the radio ads will air and there is no such time limitation, are another scam that I despise.

* While merely misleading and not actually false, I despise advertisements in the newspaper by automobile dealers that show a huge colored print price of a vehicle than is not of various discounts from manufacturer's suggested retail price in much smaller black print that include several thousand dollars of "your cash".  I'm sorry, "your cash" is part of the price of the car.  An advertisement like that screams out to the reader that the dealer is hell bent on cheating you in your negotiations to buy the car and can't be trusted.

* Multilevel marketing campaigns, often euphemized as "direct marketing" are another huge swindle.  If these industries could be regulated or taxed to the point where the industry ceased to exist entirely, the world would be a better place.

* It is amazing how many illegitimate "college preparation" counselor and test preparation and special programs advertise and make cold calls in a way designed to make them seem official or to have a prior relationship with you, when they have neither.

* "No call lists" seem to have made great inroads in stopping telemarketing, although a few persist claiming thin "prior relationships" or because they are marketing for non-profits.  In the many months before I killed my land line this month, perhaps 95% plus of calls had become junk calls, and some of the rest were robocalls (e.g. from the library reminding you of overdue books).

I have no tolerance for receiving a robocall with no one on the other side of the line when I pick up for a few moments.  It is one thing to call an automated service, and another to receive calls from them.  When I get a call like that, I immediately hang up.

* I am also offended by insincere astroturf political campaigns such as the No on 68 campaign in Colorado right now (funded by casinos to protect their turf, despite its anti-casino rhetoric), and the big dollar pro-fracking campaign of a few months ago funded by big oil companies.

Regulating these kinds of commercial and political speech and business ventures without offending the First Amendment's free speech guarantees isn't easy.  But, I do think that we could do a better job of it than we do.  Neither freedom of conscience, nor a healthy economy, require that we tolerate whole industries whose very business model depends upon deceiving and exploiting consumers and investors, although the free speed issues associated with misleading political speech are more challenging.

Zippers Can Be Dangerous

More than five thousand men a year end up in the emergency room with zipper related genital injuries.

Wells Fargo Still Stupid Or Evil

A have a client who lost his home, which was worth considerable more than his mortgage from Wells Fargo bank, in a foreclosure more than a month ago that discharged the entire amount of the loan. Today, he calls me and tells me that he just got a letter today from Wells Fargo bank with the loan number, personal identifying information, pre-foreclosure loan balance and interest rate, etc. asking him to call them to talk about modifying his loan. Incidentally, he'd also repeatedly sent them extensive packets of loan modification information over the previous six months, which each time they claimed to have never received and never acknowledged.

Not only is Wells Fargo bank too big to fail, it also appears to be to stupid to live. If it ever makes economic sense for a bank like Wells Fargo to modify loans, it is missing the boat. This is a government program that it participates in formally, but doesn't seem to actually support.

Of course, a less charitable interpretation is that somebody in management at Wells Fargo bank has decided that loan modifications are not a profit center and has deliberately set up this division of the bank to fail, because these discussions frequently discourage debtors from taking the rest of the foreclosure process seriously and thereby improve their rate of success in the collections process. For example, the loan modification division employees at Wells Fargo bank routinely tell debtors orally that they don't have to take legal action and shouldn't try to cure a loan that will otherwise go into foreclosure so they can get a modified loan, although this division of Wells Fargo bank has a strict policy of not putting any of these communications in writing. The loan modification employees at Wells Fargo go blithly on their way spinning tales of forgiveness and compromise while the collections law firm that Wells Fargo has retained (one Colorado law firm whose name I will omit has the overwhelming majority of this business statewide) does not communicate any knowledge whatsoever that this is happening.

But, in Colorado, at least, something called the credit agreement statute of frauds prevents anyone from suing a bank for making misleading or outright fraudulent oral representations of this kind from a bank employee under state law, for any reason, even though a third party debt collector or attorney who made similar representations would have civil liability for compensatory and punitive damages, even if you can identify who said it and when, even if you have a tape recording of the conversation.

Is it so much to ask that different divisions of the same bank who are interacting with the same customers regarding the same loan have any communication with each other whatsoever? Is it so much to ask that banks have a legally enforceable duty to refrain from telling the people who owe them money that they can ignore legal process that is delivered to them and should refrain from exercising their rights in that process?

Does Law Have Insufficient Visual Drama?

Once upon a time, where you wanted to sell real estate, you handed some soil or twig for the property to the buyer in what was called livery of seizen. Couples kiss, wear traditional costumes, and exchange rings when they marry in front of a crowd. One of the traditional ways to revoke a will (recently litigated in Colorado) is to destroy or deface the physical document (which leads to a number of peculiarities of probate law). Traditionally, wills were read aloud after a death, although that rarely happens these days. Even though it no longer legally matters, it is traditional to seal a contract with a handshake. When sports teams finish a game, win or lose, the players each slap hands saying "good game", emotionally putting an end to disputes over the details that led to the final result. Churches acknowledge affiliations to their faith with dramatic baptisms in the Christian church and a vividly memorable circumcision ceremony for infant Jewish and (at least in traditional societies) adolescent Muslim boys. Basic trainees in the military, men entering monastic orders, and prison inmates have their hair shorn, and are stripped of almost all of their personal possessions.

The current story arc in the webcomic Red String's (set in Japan but written by Gina Biggs of Georgia) features Hanae Niijima, a lesbian whose mother will not accept the fact that she has come out or acknowledge Hanae's true love Fuuko Akimoto. The set up to the scene is in this dialog:

Hanae: Why can't you be happy for me? This is who I am. This is ME.

Mother: It's NOT you. You were my sweet little girl who liked flowers and unicorns; who loved to be dressed up in frilly clothes and have me curl your hair. You were never a tomboy!

Hanae: That's STILL me. You think you have to be boyish to like a girl? That's . . .you can't believe that.

Hanae decides the overcome the conceptual block that seems to be getting in the way of her mother by making a visual statement:

Hanae: Fine. [Grabbing scissors with one hand and her long flowing curly hair with the other.]

Mother: What are you doing?!

Hanae: If its frills and curls keeping you from accepting this then I'll get rid of them. Will that work?

Hanae then hands a long pony tail of crudely cut off hair into the hands of her shocked mother who sits, holding it, staring off into space.

Obviously, I'm not recommending that this become a ritualized part of the process of coming out that is mandated in any way. But, powerful visual dramas can often convey meanings about abstract concepts, particularly emotionally charged ones, that some people have a hard time grasping from mere words.  Hanae's mother might be able to understand from the hair in her lap what she couldn't when her daughter merely spoke to her.

For example, one of the classic problems that one sees in modern family law litigation is that one or both of the people who once were married, or at least a loving couple, can't let go of that relationship. The service of the divorce petition, the signing of the papers, the dryly worded court order ending a marriage and providing for the sharing of the children and property of the marriage, and often a restraining order as well, don't communicate to the former member of that relationship with adequate emotional force that the relationship is really, once and for all, over.  Some people are simply beyond reaching by any means of communications, but a large number of people who go through family law proceedings simply don't really understand at an emotional and subconscious level what has happened until much later, even if they can parrot the court's ruling.

Perhaps if that message could be conveyed with more visual drama in some universally accepted new ritual, more people who move on, and there would be, as a result, less senseless fighting driven by old emotions instead of new practicalities. The demise of fault based divorce has made the process much more antiseptic for all involved in the process, but have we overdone it to the point of failing to really acknowledge in an emotionally valid way that not just the legal construct of the marriage, but also the emotional reality of the relationship that it approximates, has ended. Shouldn't the symbolism and ritual that ends of marriage need to be even more powerful and less subtle than the symbolism and ritual that starts one?

Adoptions tend to be even more understated, for fear of spooking the relinquishing parents, and not surprisingly, the main complaint that gets litigated in adoptions is that of relinquishing parents who claim they were properly appraised of the gravity of their actions.

A classic problem in consumer litigation of all kinds is the not infrequent failure of a debtor or consumer, already overwhelmed by paper and having trouble determining what is most important, to realize that a summons and complaint in a lawsuit is a once and for all speak now or forever hold your peace notice that has profound legal consequences if ignored.  This lack of understanding is one of the driver's of the almost ubiquitous paranoia about ulterior motives and about being cheated by one's betters found among unsophisticated people who have frequently been on the receiving side of litigation.

Perhaps we would do well to imitate the litigation practices of the protocol agents of the advanced civilization in the science fiction book "Jaran" by Kate Elliott, where legal disputes are announced by delivery of a physical baton in person by a courier, and one responds to the allegations at a mandatory in person appearance at the designated place and time, as inefficient as that may be, rather than simply enforcing the duty to appear by entering a default judgment against a party who does not appear (one that is often forgotten until property is seized pursuant to the judgment).

I have no empirically evidence to support the theory that more dramatic visual drama in the legal system would make any difference at all. The modern trend has been to strip away formalities, arcane language, pompous court room surroundings, wax seals, fancy ribbons and the like from legal matters. Instead, modern legal proceedings and legal facilities, favor plain English, the bare minimum of in person appearances, contemporary but understated and inoffensive surroundings suited for efficient, processing of business matters, dispenses with wigs and obtuse morning suits, and use very simple seals and acknowledgements - relying on the ability to confirm orders with third party repositories rather than lack of counterfeitability for reliability. Many documents that used to have to be notarized are now simply signed under penalty of perjury with no third party verification of identity or intent.

For lots of purposes this trend may be a good one. It demystifies the legal system and makes it more accessible to pro se parties. Much of what courts do is as much administrative business as it is emotionally meaningful decision making. For the most part, people prefer an inexpensive, quick, form driven informal probate process to the traditional succession proceedings of courts of equity will all their pomp and circumstance. And, some parts of the court process, like the delivery of jury verdicts finding someone guilty or not guilty, have managed to hold onto some of the drama that gives them emotional power. But, maybe some of the time, particularly in civil matters that don't involve business people and may have consequences for people who do not have the same cultural heritage as the lawyers and judges who are running the system, a higher touch, lower tech approach is in order and would make courts more effective. It is certainly a hunch that would be worth exploring with more systematic research.