On September 9, 2014 Governor Jerry Brown signed into law AB 2365. The new law can be found in California Civil Code section 1670.8. It will prohibit the use of “non-disparagement” clauses in consumer contracts and will make any attempted enforcement of such clauses illegal starting January 1, 2015. The law carries statutory penalties, which may be sought by the consumer in a private civil action, which raises the possibility of class action.
This law will impact any contract covering a sale of consumer goods or services in California. It carries a maximum statutory penalty of $2,500.00 for first-time violations, and $5,000.00 damages for subsequent violations. Intentional, willful, or reckless violations of the law carry a maximum statutory penalty of $10,000.00.
The bill was passed in reaction to online consumer agreements containing an increasing non-disparagement clauses, which the legislature viewed as contrary to public policy. The bill is also known as the "Yelp" bill, and has the aim of protecting online consumer review forums.
For an outstanding synopsis of the law, see attorney Songmee L. Connolly's (Fenwick & West) article here.
The bill's text can be found here.
California Consumer Law Blog
Consumer Law Issues in California
Monday, September 29, 2014
Thursday, September 18, 2014
Underdog Law Blog: Payday Lender Liable for Expenses Incurred Prosecuting its Bankruptcy Violation
Check out another great blog entry by Attorney Michael Fuller regarding the Ninth Circuit's recent decision in In re Snowden, a case that has a major impact on a consumer debtor's right to attorney fees in contested stay violation cases brought under 11 U.S.C. section 362(k). The court adopted a more abstract standard to determine whether a consumer debtor is entitled to attorney fees throughout a 362(k) action. The court asks whether the petition is using the stay as a "shield" or as a "sword." This inherently requires a factual analysis of the alleged stay violation, and whether or not the defendant has remedied the violation, with no strings attached. In conjunction with Schwartz-Tallard, it follows that absent this admission of liability by remediation, the defendant is subjected to ongoing liability for attorney fees under 362(k) until final adjudication.
See the article at the Underdog Law Blog here: http://www.underdoglawblog.com/2014/09/payday-lender-liable-for-expenses.html
See the article at the Underdog Law Blog here: http://www.underdoglawblog.com/2014/09/payday-lender-liable-for-expenses.html
Wednesday, September 3, 2014
Underdog Law Blog: Wells Fargo Gets Free Pass in Ninth Circuit
Check out Michael Fuller's blog entry on the Ninth Circuit's decision in In re Mwangi. There, the Ninth Circuit Court of Appeals upheld a controversial practice employed by Wells Fargo whereby it freezes debtor's bank accounts when they file Chapter 7 bankruptcy. The practice can put individuals in a helpless position, particularly when they need access to their accounts to pay for food, gas, and utilities following the filing of their Chapter 7 cases.
Underdog Law Blog: Wells Fargo Gets Free Pass in 9th Cir. Bankruptcy
Underdog Law Blog: Wells Fargo Gets Free Pass in 9th Cir. Bankruptcy
Monday, June 9, 2014
New Executive Order Will Expand Student Loan Relief
Starting
December 2015 the new Pay As You Earn (PAYE) program is planned to be extended
to all federal direct student loans. http://www.washingtonpost.com/blogs/post-politics/wp/2014/06/09/obama-to-sign-executive-order-capping-student-loan-payments/.
PAYE is a special payment plan that is currently only available for student loan borrowers who took a federal loan out no
earlier than Fall 2007 and also took a new loan out in Fall 2011. The program has thus been inaccessible to the majority of borrowers.
PAYE caps
student loan payments at 10 percent of their “discretionary income.” The
next-best program, which the majority of low-income borrowers use, is the
Income-Based Repayment Plan (IBR), which caps payments at 15 percent of
discretionary income. This results in higher required payments under IBR as
compared to PAYE.
Other
benefits of PAYE include forgiveness after 20 years of qualifying payments (as
compared to 25 for IBR), interest payment benefits, and a limitation on the
capitalization of interest. https://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn
Sunday, May 18, 2014
Bank Ignores Bankruptcy Judge; Fails to Appear at Contempt Hearing
An Oregon consumer has asked a federal judge to hold one of
the country’s largest banks in
contempt of court. For a second time.
According to court
documents filed by the consumer’s
attorney, U.S. Bank N.A. violated the bankruptcy
discharge last February by seizing wages from a checking account without
notice.
After the bank refused to return the wages, a Eugene bankruptcy judge ordered it to appear and explain why it shouldn’t be held in contempt of court.
After the bank refused to return the wages, a Eugene bankruptcy judge ordered it to appear and explain why it shouldn’t be held in contempt of court.
When the contempt hearing was called on May 8, only the judge
and the consumer’s
attorney were present.
For reasons unknown, the bank failed to
appear.
U.S. Bank N.A. now faces another motion seeking a second
contempt order, this time based on its failure to timely turn over documents in
the case.
A motion filed by the consumer’s attorney on May 12 indicates
the bank has received over a dozen notices of the contempt matter; several by
certified mail.
In April, Wells Fargo Bank, N.A. settled similar
charges that it had illegally
seized $197 from one of its customer’s accounts during bankruptcy. The bank
paid
the customer $35,000 to settle without having to admit
liability.
U.S. Bank N.A. is the deposit-products arm of U.S. Bancorp, the country’s
fifth largest bank by assets.
[Case Number 13-62766-tmr7, Eugene, Oregon Bankruptcy
Court]
For more information about bankruptcy enforcement, visit www.UnderdogLawyer.com, or follow @UnderdogLawBlog on
Twitter.
Saturday, May 3, 2014
Private Student Loans Going Into Default When Co-Signer Dies or Files Bankruptcy
The New York Times reports that many private student loans contain provisions that allow the lender to declare the entire balance due and payable after a co-signer dies or files bankruptcy, even when the borrower is current on loan payments.
The Consumer Financial Protection Bureau (CFPB) published an advisory regarding this practice on April 22, 2014. The government agency has received an increasing amount of consumer complaints regarding the practice. While the CFPB does not state that the practice is illegal, it sternly warns private student loan borrowers about the real consequences when a co-signer dies or files bankruptcy.
The CFPB recommends that borrowers contact their private student loan servicer and request a "co-signer release", which can help both the borrower and the co-signer. Often, the lender will require a credit check and a history of timely payments before awarding a co-signer release. Sample request letters can be found on the CFPB's Website.
Sources
Perez-Pena, Richard, Student Loans Can Suddenly Come Due When Co-Signers Die, A Report Finds, The New York Times, April 22, 2014. http://www.nytimes.com/2014/04/22/us/student-loans-can-suddenly-come-due-when-co-signers-die-a-report-finds.html?_r=0.
Chopra, Rohit, Consumer advisory: Co-signers can cause surprise defaults on your private student loans, Consumer Financial Protection Bureau, April 22, 2014, http://www.consumerfinance.gov/blog/consumer-advisory-co-signers-can-cause-surprise-defaults-on-your-private-student-loans/.
The Consumer Financial Protection Bureau (CFPB) published an advisory regarding this practice on April 22, 2014. The government agency has received an increasing amount of consumer complaints regarding the practice. While the CFPB does not state that the practice is illegal, it sternly warns private student loan borrowers about the real consequences when a co-signer dies or files bankruptcy.
The CFPB recommends that borrowers contact their private student loan servicer and request a "co-signer release", which can help both the borrower and the co-signer. Often, the lender will require a credit check and a history of timely payments before awarding a co-signer release. Sample request letters can be found on the CFPB's Website.
Sources
Perez-Pena, Richard, Student Loans Can Suddenly Come Due When Co-Signers Die, A Report Finds, The New York Times, April 22, 2014. http://www.nytimes.com/2014/04/22/us/student-loans-can-suddenly-come-due-when-co-signers-die-a-report-finds.html?_r=0.
Chopra, Rohit, Consumer advisory: Co-signers can cause surprise defaults on your private student loans, Consumer Financial Protection Bureau, April 22, 2014, http://www.consumerfinance.gov/blog/consumer-advisory-co-signers-can-cause-surprise-defaults-on-your-private-student-loans/.
Sunday, February 9, 2014
Insurers Beware: When the Duty to Defend Against FCRA and TCPA Claims Arises
In her recent publication, Viruses, Trojans and Spyware, Oh My! The Yellow Brick Road to Coverage in the Land of Internet Oz - Part II, Roberta D. Anderson of The National Underwriter Company discussed the duty of insurers to defend their insured against Fair Credit Reporting Act (FCRA) and Telephone Consumer Protection Act (TCPA) claims under commercial general liability (CGL) policies that cover "advertising injuries." Anderson cited recent case law, including Pietras v. Sentry Insurance Co. 2007 WL 715759 (N.D. Ill. Mar. 6, 2007) (construing Illinois law), which construed terms in CGL policies to extend to FCRA claims, holding that publication of private information to a single individual was enough to constitute an advertising injury, thus triggering a duty to defend. Becuase there was an invasion of a right of privacy (personal information access without permissible purpose) and publication (disseminated to at least one person), there was both a violation of FCRA and coverage of the claim under the advertising injury provision.
Anderson also pointed to Zurich American Ins. Co. v. Feldstone Mortgage Co. 2007 WL 3268460 (D. Md. Oct. 26, 2007) (construing Maryland law), where the plaintiff sued the insured under FCRA for improperly accessing his credit information without his authorization and without a permissible purpose (no firm offer of credit). There, the court rejected the insurer's argument that FCRA does not establish a right of privacy and held that "publication" need not be made to a third party to trigger the duty to defend under the CGL policy. It was enough that the insured accessed credit information in violation of FCRA.
She then went on to describe how the "right of privacy" and "publication" elements of an advertising injury are embodied in underlying claims alleging Telephone Consumer Protection Act (TCPA) violations as well. She pointed to a case involving unsolicited fax advertisements. The insurer argued that while there was a publication of some information (ads), that no right of privacy was infringed by the advertisements (no personal information_. However, the court there (Tenth Circuit) held that it was enough that the unwanted faxes infringed on the recipient's right to be left alone. See Park University Enterprises, Inc. v. American Cas. Co. of Reading, PA 442 F.3d 1239 (10th Cir. 2006) (interpreting Kansas law).
The lesson learned in the article is the importance of the role of general liability insurance policies for companies that market to consumers on the web or otherwise. It is also a warning. Insurers may face liability under their CGL policies for failing to defend their insureds against consumer FCRA and TCPA claims. This is because "advertising injury" has been construed broadly to encompass nearly any act of publication of private information which violates either statute.
Source: Andersen, Robert D., Viruses, Trojans and Spyware, Oh My! The Yellow Brick Road to Coverage in the Land of Internet Oz - Part II, The National Underwriter Corporation, 2014. http://www.klgates.com/files/Publication/787006d0-b42d-4994-a51d-20a3e3af52d4/Presentation/PublicationAttachment/8eae73c8-4f47-4c14-a032-0723002f5d9d/Viruses_Trojans_and_Spyware_Oh_My.pdf
Anderson also pointed to Zurich American Ins. Co. v. Feldstone Mortgage Co. 2007 WL 3268460 (D. Md. Oct. 26, 2007) (construing Maryland law), where the plaintiff sued the insured under FCRA for improperly accessing his credit information without his authorization and without a permissible purpose (no firm offer of credit). There, the court rejected the insurer's argument that FCRA does not establish a right of privacy and held that "publication" need not be made to a third party to trigger the duty to defend under the CGL policy. It was enough that the insured accessed credit information in violation of FCRA.
She then went on to describe how the "right of privacy" and "publication" elements of an advertising injury are embodied in underlying claims alleging Telephone Consumer Protection Act (TCPA) violations as well. She pointed to a case involving unsolicited fax advertisements. The insurer argued that while there was a publication of some information (ads), that no right of privacy was infringed by the advertisements (no personal information_. However, the court there (Tenth Circuit) held that it was enough that the unwanted faxes infringed on the recipient's right to be left alone. See Park University Enterprises, Inc. v. American Cas. Co. of Reading, PA 442 F.3d 1239 (10th Cir. 2006) (interpreting Kansas law).
The lesson learned in the article is the importance of the role of general liability insurance policies for companies that market to consumers on the web or otherwise. It is also a warning. Insurers may face liability under their CGL policies for failing to defend their insureds against consumer FCRA and TCPA claims. This is because "advertising injury" has been construed broadly to encompass nearly any act of publication of private information which violates either statute.
Source: Andersen, Robert D., Viruses, Trojans and Spyware, Oh My! The Yellow Brick Road to Coverage in the Land of Internet Oz - Part II, The National Underwriter Corporation, 2014. http://www.klgates.com/files/Publication/787006d0-b42d-4994-a51d-20a3e3af52d4/Presentation/PublicationAttachment/8eae73c8-4f47-4c14-a032-0723002f5d9d/Viruses_Trojans_and_Spyware_Oh_My.pdf
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