The Consumer Financial Protection Bureau Just Made Your Life Better

So many times better:

"The nation’s consumer watchdog is unveiling a proposed rule on Thursday that would restore customers’ rights to bring class-action lawsuits against financial firms, giving Americans major new protections and delivering a serious blow to Wall Street that could cost the industry billions of dollars." (link)

In the words of Richard Cordray, director of the Consumer Financial Protection Bureau:

“Many banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them.” (link)

As noted in a previous post covering The Nation's article How Consumers Are Getting Screwed by Court-Enforced Arbitration -- yes -- unfortunately -- this applies to you.

Aunt Jemima No Longer Smiling

The heirs of Anna S. Harrington, the woman portrayed as Aunt Jemima on Aunt Jemima pancakes products for approximately 80 years, have filed a class action alleging Quaker Oates intentionally withheld royalties associated with the use of her likeness:

"In their suit, D.W. Hunter and Larnell Evans say Quaker Oats representatives discovered their great-grandmother, Anna S. Harrington, making pancakes at the New York State Fair in 1935.

Harrington portrayed the character in commercials and other public appearances for 15 years.

The suit says Quaker Oats used Harrington's pancake recipes and trademarked her likeness as the character 'Aunt Jemima' in 1937.

The great-grandsons say Quaker Oats exploited Harrington with the intent of not paying royalties toward her estate after her death in 1955. They claim the companies conspired not to acknowledge Harrington's status as an employee of Quaker Oats by saying they could not find any employment records or images of her. But they say, Quaker Oats had her image deposited with the United States Patent and Trademark Office.

Harrington's family, according to the complaint, filed the suit after it was able to obtain a death certificate that listed Quaker Oats as Harrington's employer." (link).

The suit also alleges that Quaker Oates wrongfully took Harrington's pancake recipes and racially discriminated against her and her family.  Plaintiffs seek $2 billion in damages.

Elizabeth Warren Explains The New American Cheating-Based Economy

Senator Elizabeth Warren always hits it on the nose with consumer protection issues and the American economy.

Here she is talking through the American cheating-based economy and student loan reform with David Letterman.

If these issues matter to you this is a must watch:

New York's Redlining Race Discrimination Remix

These days the most common claims of lending discrimination have been "reverse redlining" cases.

But the NY Attorney General is hot on the trail of apparently resurgent good-old-fashioned redlining discrimination.  The AG filed a suit for discriminatory redlining practices against the parent company of Hamburg-based Evans Bank -- and has described the alleged redlining as a textbook example of an illegal redlining policy:

“This is classic redlining,” Schneiderman said, tracing his finger around the boundary. “If you had to make up a hypothetical to explain to law students what redlining is, you would use a map like this.”

Schneiderman also cited statistics showing that from 2009 to 2012, Evans received 1,114 applications for residential mortgages in the Buffalo metro area, but only four were from African-American applicants. He also said of those 1,114 applications, only eight came from the East Side and just one of those was from an African-American. Schneiderman said that competing banks were lending at much higher rates." (link)

Here's the relevant map of Evan's lending:

To be blunt, this map does very much look like it could be in a lending discrimination textbook.

Moreover, it looks like there's more good-old-fashioned redlining litigation to come:

“We are looking at other banks in other parts of the state, and if banks do not agree to resolve these really disgraceful practices, then there will be further litigation,” Schneiderman said at a news conference in his Buffalo office." (link)

Stay tuned for some discrimination classic hits!

The Nation: How Consumers Are Getting Screwed by Court-Enforced Arbitration

Yes, unfortunately, this applies to you:

"For more than forty years, the Supreme Court’s conservatives have been engaged in a campaign to shut the courthouse door to consumers, working people, small businesses and others seeking redress for corporate wrongdoing. 

In recent years, and especially since Chief Justice John Roberts and Associate Justice Samuel Alito joined the Court, a major weapon in this campaign has been the Federal Arbitration Act (FAA) of 1925. The conservatives have used the act to prevent victims of such abuses from seeking redress in the courts, forcing them into pre-dispute arbitration instead. In doing so, they lose a public trial, a jury and a neutral judge, as well as an appeal to a higher court; in many cases they may also have to give up discovery rights. It is not uncommon for them to wind up before an arbitrator who is dependent upon the defendant’s business community for work and fees, and who may not even be legally trained. Not surprisingly, those forced into arbitration almost always fare much worse than they would in court.

* * *

Two reports issued at the end of last year show how effective the Court’s arbitration rulings have been. Last December, the Consumer Financial Protection Bureau (CFPB) issued a preliminary report, which found that contract clauses mandating pre-dispute arbitration are a “common feature of consumer financial contracts”; a final report is due by year’s end. The agency found such clauses in over 50 percent of credit card loans, 81 percent of prepaid charge cards and in checking accounts covering 44 percent of all insured deposits."  (emphasis added). (continue reading)

When I first started to understand the scope of this issue and began taking a hard look at my various consumer contracts it was truly startling.  Even almost a decade ago, I found that the vast majority of my consumer contracts were subject to mandatory arbitration agreements.

For example, that huge bill AT&T sent you that was incorrect - perhaps because they charged you based on your previous plan even though you upgraded - if you can't get a decent customer relations person on the phone (a real risk) you can't challenge the charge in court.

That's something to really give some thought to as a consumer.  

Do you really want to have a contract with a company that is not willing to stand by the quality of its product and services in court?  If the answer to that is no - then there's a real problem -  some consumer industries do not offer a viable company you can use that does not use mandatory arbitration agreements.

If this is all a bit disturbing you may have good reason to get behind the stalled Arbitration Fairness Act. Take a look:

THE ARBITRATION FAIRNESS ACT OF 2013

Senator Al Franken

The ability of ordinary Americans to seek justice in our courts, even when up against the most powerful corporate interests, has become a fundamental element of our civil justice system. However, the growing use of forced arbitration provisions in consumer and employment contracts has eroded this essential function. Forced arbitration provisions thwart the ability of workers and consumers to hold corporations accountable for wrongdoing, even in the most egregious cases. (continue reading)