Category Archives: consumer protection

A Surprise Billing Law May Have Unintended Effects on Health Care

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From today’s NPR News Online:

Patients are months away from not having to worry about most surprise medical bills — those extra costs that can amount to hundreds or thousands of dollars when people are unknowingly treated by an out-of-network doctor or hospital.

The No Surprises Act — which takes effect Jan. 1 — generally forbids insurers from dropping such bills on patients and, instead, requires health care providers and insurers to work out a deal between themselves.

Some observers have speculated that the law will have the unintended consequence of shifting costs and leading to higher insurance premiums.

Many policy experts told KHN that, in fact, the opposite may happen: It may slightly slow premium growth.

The reason, said Katie Keith, a research faculty member at the Center on Health Insurance Reforms at Georgetown University, is that a new rule released Sept. 30 by the Biden administration appears to “put a thumb on the scale” to discourage settlements at amounts higher than most insurers generally pay for in-network care.

That rule, which provides more details on the way such out of network disputes will be settled under the No Surprises Act, drew immediate opposition from hospital and physician groups. The American Medical Association called it “an undeserved gift to the insurance industry,” while the American College of Radiology said it “does not reflect real-world payment rates” and warned that relying on it so heavily “will cause large imaging cuts and reduce patient access to care.”

Read the complete story here.

Families Harmed By SoCal Gas Methane Leak Reach $1.8 Billion Settlement

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From today’s NPR News Online:

Thousands of families sickened and forced from their Los Angeles homes after the nation’s largest-known natural gas leak have reached a settlement of up to $1.8 billion with a utility, attorneys said Monday.

The settlement with Southern California Gas Co. and its parent company, Sempra Energy, will compensate 35,000 plaintiffs from the 2015 blowout that took nearly four months to control.

The Aliso Canyon blowout led to the largest-known release of methane in U.S. history and was blamed for sickening thousands of residents who moved out of homes near the San Fernando Valley to escape a sulfurous stench and maladies including headaches, nausea and nose bleeds.

The plaintiffs alleged personal injury for their illnesses and property damage to their homes. SoCalGas spent more than $1 billion on the the blowout — with most going to temporarily relocate 8,000 families. The utility has faced more than 385 lawsuits on behalf of 48,000 people.

Plaintiffs alleged they suffered personal injury and property damage after a natural gas storage well failed and uncontrollably released nearly 100,000 tons of methane and other substances into the atmosphere over 118 days.

SoCalGas said it would record an after-tax charge of approximately $1.1 billion this month and expects total settlement payments of up to $1.85 billion. The agreement is subject to about 97% of plaintiffs accepting it and could be reduced if fewer agree.

Matt Pakucko, founder of Save Porter Ranch, issued a statement repeating his call for the permanent shutdown of the facility, where natural gas is stored beneath a mountain in vacant, old oil wells.

“You can’t put a price tag on human suffering,” he said. “SoCalGas’ devastating blowout will never be behind us until the Aliso Canyon storage facility is shut down and the danger it poses to the community is permanently eliminated. We are nowhere near a resolution.”

Read the complete story here.

CFPB Finds That Income Share Agreements Are Credit Products

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From today’s Mondaq News Online:

On September 7, 2021, the CFPB announced that it had entered into a  consent order with an education finance nonprofit (“nonprofit”) in connection with the nonprofit’s offering of income share agreements (“ISAs”). In the consent order, the CFPB asserted that ISAs are extensions of credit covered by the Consumer Financial Protection Act and the Truth in Lending Act (“TILA”) as well as TILA’s requirements with respect to “private education loans.” Because the CFPB asserts in the consent order that it views the nonprofit’s ISAs as credit, the CFPB takes the position that they are also subject to numerous other federal consumer financial protection laws that impose requirements and restrictions on student loan products. This consent order has significant implications for those in the ISA market, as it indicates how the CFPB views re-characterization for ISAs and similar products.

Most ISAs are agreements under which students are provided education funding on the condition that the student pay an agreed-upon percentage of the student’s future income over a defined, post-graduation timeframe. Many ISAs do not require customers to pay anything until their income exceeds a contractually defined floor. A percentage of income exceeding that floor is paid to the ISA provider as an investment return-potentially subject to a cap on overall payments depending on the terms of the specific ISA at issue. Under many common ISA structures, it is conceivable that some customers ultimately will pay nothing in the defined, post-graduation timeframe and, therefore, will see the ISA expire without any payment obligation; other customers will pay an amount less than the funding originally provided; and a final set of customers will pay amounts exceeding the original funding (though, as noted, frequently subject to a total payment cap). While most ISAs provide educational funding, similar products exist to provide funding to consumers, small businesses, and even professional athletes.

Given their structure, ISA providers have generally taken the position that ISAs are not credit and, therefore, are not subject to the requirements of many federal consumer financial protection laws. With this settlement, the CFPB appears to reject that position. The consent order summarily states that the nonprofit’s “ISAs are credit under the CFPA because they grant consumers the right ‘to defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment for such purchase.'” In a statement on the settlement, Acting CFPB Director Dave Uejio said, “[t]he ISA industry has tried to evade oversight by claiming that its products are not loans . . . [b]ut regardless of the name on the label, these products are credit and have to comply with federal consumer protections. The ISA industry cannot pretend that core consumer protection laws do not apply to their products.”

Read the complete story here.

Colorado introduces tight consumer protection law on data privacy

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From today’s Digital Journal:

Colorado is set to become the third state — alongside Virginia and California — to sign a privacy act into law, marking another step towards consumer data protection in the U.S.

The new law will be known as ‘The Colorado Privacy Act (CPA)’ and it is scheduled go into effect July 2023. The proposal is for the Act to be applicable to companies that either collect personal data from 100,000 Colorado residents or collect data from 25,000 Colorado residents and also derive some portion of revenue from sales.

The Act will affect businesses and they will need to prepare and put in place systems to ensure compliance. In addition, the Act will provide new rights for customers, and there remains the potential for more states to get on board with this form of legislation.

Looking at the changes for Digital Journal is Tyrone Jeffrees, Vice President of Engineering & US Information Security Officer at Mobiquity.

Jeffrees looks at the growing array of privacy bills appearing in the U.S.: “The news of Colorado joining Virginia and California in the passage of privacy acts is welcome as the nation moves towards ensuring these rights for residents and consumers. The law, while holding many similarities to Virginia’s privacy regulations, is expected to be more effective than others as it can be enforced by both the Colorado office of the Attorney General as well as local district attorney offices.”

He adds that the CPA is a little different to the earlier bills: “The CPA goes beyond California’s by requiring a blocking option for consumers to “opt-out” of having their personal information shared to create consumer profiles.”

This means new challenges for businesses, says Jeffrees. He recommends: “To ensure compliance with the CPA’s heavier guidelines, businesses and organizations must have a deeper understanding of how their data is collected and exactly what it is being used for when targeting new customers and sharing publicly.”

Jeffrees sees the legislation as something positive, noting: “I’m thrilled for the residents of Colorado. Ultimately, each new legislation is a win for U.S. consumers and privacy advocates. As more states introduce privacy regulation, U.S. consumers will be afforded increased agency and control over how their data can be collected and used.”

He see the U.S. as moving towards stronger consumer rights: “Right now, we have a patchwork of privacy regulations that guarantee rights for some, but not all, U.S. consumers based on residency. Each state that adopts common privacy principles will slowly start to raise the bar, but it would be ideal for U.S. residents to have one single framework for data privacy that serves all Americans.”

Read the complete article here.

To Protect Consumer Data, Don’t Do Everything on the Cloud

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From today’s Harvard Business Review:

When collecting consumer data, there is almost always a risk to consumer privacy. Sensitive information could be leaked unintentionally or breached by bad actors. For example, the Equifax data breach of 2017 compromised the personal information of 143 million U.S. consumers. Smaller breaches, which you may or may not hear about, happen all the time. As companies collect more data — and rely more heavily on its insights — the potential for data to be compromised will likely only grow.

With the appropriate data architecture and processes, however, these risks can be substantially mitigated by ensuring that private data is touched at as few points as possible. Specifically, companies should consider the potential of what is known as edge computing. Under this paradigm, computations are performed not in the cloud, but on devices that are on the edge of the network, close to where the data are generated. For example, the computations that make Apple’s Face ID work happen right on your iPhone. As researchers who study privacy in the context of business, computer science, and statistics, we think this approach is sensible — and should be used more — because edge computing minimizes the transmission and retention of sensitive information to the cloud, lowering the risk that it could land in the wrong hands.

But how does this tech actually work, and how can companies who don’t have Apple-sized resources deploy it?

Consider a hypothetical wine store that wants to capture the faces of consumers sampling a new wine to measure how they like it. The store’s owners are picking between two competing video technologies: The first system captures hours of video, sends the data to third-party servers, saves the content to a database, processes the footage using facial analysis algorithms, and reports the insight that 80% of consumers looked happy upon tasting the new wine. The second system runs facial analysis algorithms on the camera itself, does not store or transmit any video footage, and reports the same 80% aggregated insight to the wine retailer.

The second system uses edge computing to restrict the number of points at which private data are touched by humans, servers, databases, or interfaces. Therefore, it reduces the chances of a data breach or future unauthorized use. It only gathers sufficient data to make a business decision: Should the wine retailer invest in advertising the new wine?

As companies work to protect their customers’ privacy, they will face similar situations as the one above. And in many cases, there will be an edge computing solution. Here’s what they need to know.

Read the complete article here.

Fintechs Need Strong Consumer Protections, Diversity, Inclusion Asserts Key Congressman

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From tdoay’s Forbes Magazine:

Fintechs need to include strong consumer protections, diversity, and inclusion, Rep. Ed Perlmutter (D-CO), chair of the House Financial Services Committee’s panel on consumer protection and financial institutions said at a hearing on banking innovation today.

“Most banks and credit unions have been a source of strength in the pandemic in part because of the stringent capital, liquidity, and other regulatory requirements we place on these financial institutions,” he asserted.

The financial stability risks, consumer protection issues, market fairness questions, and potential benefits of unconventional banking charters needs to be explored, Perlmutter said.

Financial Services Committee Chairman Maxine Waters (D-CA) said she was alarmed the Office of the Comptroller of the Currency (OCC) overstepped its authority by creating a fintech charter and expressed concern it could lead to a regulatory race to the bottom.

The New York State Department of Financial Services has sued the agency, claiming it lacks the legal authority to issue that type of charter. In a memo prepared for the hearing, the Committee’s Democratic staff noted in recent years, OCC, and the Federal Deposit Insurance Corporation (FDIC) have taken steps to allow firms to engage in banking activities while being subject to less regulations and supervision compared to most other banks and credit unions.

At the same time Wyoming, which was mentioned frequently at the hearing, and other states have ventured into unconventional bank charters aimed at allowing cryptocurrency and blockchain to provide bank-like services.

Financial Services Committee lead Republican, Patrick McHenry of North Carolina, said regulators should be advancing advances in banking innovation and not hindering them.

Brian Brooks, who headed up the agency as Acting Comptroller of the Currency during the Trump administration praised the potential of fintechs to expand credit and economic opportunity with additionally providing better alternatives to payday lenders.

Read the complete article here.

Robinhood ‘buried’ info on consumer rights in runup to GameStop saga

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From today’s MarketWatch.com:

Sen. Elizabeth Warren denounced online broker Robinhood’s practices for disclosing its customer rights in a statement Wednesday, while calling on the Securities and Exchange Commission to ban the practice of requiring new customers to forfeit their right to sue their stock brokers in court.

“Robinhood promised to democratize trading, but hid information about its prerogative to change the rules by cutting off trades without notice — and about customers’ inability to access the courts if they believe they’ve been cheated — behind dozens of pages of legalese,” the Massachusetts Democrat said.

Robinhood’s user agreement, like those of its largest competitors, requires new customers to agree that disputes between them and the company must be resolved through binding arbitration. Robinhood did not immediately respond a request for comment.

She also criticized the firm’s decision to temporarily restrict trading of a number of so-called meme stocks, including GameStop Inc. GME, -7.21% and AMC Entertainment Inc., AMC, -1.77% once their volatility triggered large clearinghouse deposit requirements. Warren said the company “did not have enough cash on had to manage a surge in trading and buried important information about consumers’ rights.”

Along with the statement, Warren released Robinhood’s response to a Feb. 2 letter in which she asked for a detailed description of the broker’s relationship with market makers, hedge funds and other entities that may have influenced its decisions. Robinhood executives have said in sworn statements that its decision to restrict trading was due solely to its need to manage risk and meet clearinghouse requirements, though Warren does not appear fully satisfied with this explanation.

“What’s still not clear from Robinhood’s response to my questions is the full extent of Robinhood’s ties to giant hedge funds and market makers,” Warren explained. “I’m going to keep pushing regulators to use the full range of their regulatory tools to ensure the fair operation of our markets, particularly for small investors.”

Read the complete article here.

CFPB, muzzled under Trump, prepares to renew tough industry oversight

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From today’s Philadelphia Inquirer:

The Consumer Financial Protection Bureau, the watchdog created after the 2008 financial meltdown and largely muzzled in the Trump era, is poised to start barking again.

The agency will focus first on enforcing legal protections for distressed renters, student borrowers, and others facing growing debt that its previous leadership has been lax about during the pandemic.

But the CFPB — which President Joe Biden has tapped 38-year-old Rohit Chopra, a Wharton School grad, to lead — is also likely to take an unprecedentedly tough line against industry giants it finds engaging in abusive practices, former agency officials advising the Biden team say.

“It’s a matter of ramping back up,” said Richard Cordray, the CFPB’s first director, who stepped down in late 2017. The agency under Trump was “picking at odds and ends. They ramped down, and it’s a matter of changing direction.”

That will mark a dramatic turn. Just last year, consumer complaints to the agency rose by 60% over 2019, agency data show, setting a new record as the economic crisis wiped out millions of jobs and pushed lower-income Americans to the brink.

Yet the relief the agency secured for consumers topped out at less than $700 million, a fraction of the $5.6 billion it collected in 2015, its high watermark. Kathy Kraninger, a Trump appointee who resigned as director of the agency last week at Biden’s request, signaled the outcome at the start of the pandemic. She said in late March that financial companies would not face penalties for violating consumer protections in the Cares Act if they made “good-faith” efforts to comply.

The approach continued the agency’s more hands-off approach to corporate interests under Trump appointees. Over the course of the Trump presidency, the agency wrangled $2.3 billion in consumer relief, a steep drop from the $10.7 billion during its first five full years in operation under the Obama administration. And the agency shifted its crosshairs notably — from big-money actions against major companies including American Express, Citibank, Corinthian Colleges, JPMorgan Chase, Sprint, and Wells Fargo, to smaller-dollar rulings against more fringe firms.

“When you’re only going after last-dollar scammers and small, fly-by-night companies, you’re not sending a message to the big banks, big debt collectors, and big credit bureaus that there’s a sheriff in town,” said Ed Mierzwinski, senior director of the U.S. Public Interest Research Group’s federal consumer program. “As soon as he’s confirmed, Rohit will bring a renewed sense of urgency.”

Read the complete article here.

United Airlines might require its employees to take the COVID-19 vaccine

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From today’s New York Times:

The chief executive of United Airlines told the company’s employees this week that the carrier — and other businesses — could make the coronavirus vaccine mandatory for all workers.

“It’s the way to ensure the safety of our employees,” United Airlines chief executive Scott Kirby said.

“The worst thing that I believe I will ever do in my career is the letters that I have written to the surviving family members of co-workers that we have lost to the coronavirus,” the executive, Scott Kirby told employees at a virtual town hall on Thursday, according to a transcript of the remarks. “And so, for me, because I have confidence in the safety of the vaccine — and I recognize it’s controversial — I think the right thing to do is for United Airlines, and for other companies, to require the vaccines and to make them mandatory.”

Some states, such as New York, have already made the vaccine available to flight attendants, pilots and other airline and airport employees. United has encouraged employees to get the vaccine as soon as they can.

Mr. Kirby’s comments, first reported by CNBC, do not reflect actual corporate policy. The airline would need to overcome logistical hurdles before requiring its tens of thousands of employees to get vaccinated and would need other businesses to join it in requiring vaccination, he said.

A spokesman for Delta Air Lines declined to comment on whether it will require the vaccine, but said the carrier is advocating that flight crews are considered essential workers for the purposes of vaccine distribution. American Airlines said on Thursday that it is encouraging its employees to get the vaccine, but won’t require it unless necessary for employees who fly to destinations where it is mandated.

Read the complete article here.

U.S. Files Suit Against Facebook, Claiming It Illegally Crushed Competition

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From today’s New York Times:

The Federal Trade Commission and more than 40 states accused Facebook on Wednesday of becoming a social media monopoly by buying up its rivals to illegally squash competition, and said the deals that turned the social network into a behemoth should be unwound.

Federal and state regulators, who have been investigating the company for over 18 months, said in separate lawsuits that Facebook’s purchases, especially Instagram for $1 billion in 2012 and WhatsApp for $19 billion two years later, eliminated competition that could have one day challenged the company’s dominance.

Since those deals, Instagram and WhatsApp have skyrocketed in popularity, giving Facebook control over three of the world’s most popular social media and messaging apps. The applications have helped catapult Facebook from a company started in a college dorm room 16 years ago to an internet powerhouse valued at more than $800 billion.

The prosecutors called for Facebook to break off Instagram and WhatsApp and for new restrictions on future deals, in what amounted to some of the most severe penalties regulators can demand.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” said Attorney General Letitia James of New York, who led the multistate investigation into the company’s in parallel with the federal agency.

The lawsuits, filed in the U.S. District Court of the District of Columbia, underscore the growing bipartisan and international tsunami against Big Tech. Lawmakers and regulators have zeroed in on the grip that Facebook, Google, Amazon and Apple maintain on commerce, electronics, social networking, search and online advertising, remaking the nation’s economy. President Trump has argued repeatedly that the tech giants have too much power and influence, and allies of President-elect Joseph R. Biden Jr. make similar complaints.

The investigations already led to a lawsuit against Google, brought by the Justice Department two months ago, that accuses the search giant of illegally protecting a monopoly. Prosecutors in that case, though, stopped short of demanding that Google break off any parts of its business. At least one more suit against Google, by both Republican and Democratic officials, is expected by the end of the year. In Europe, regulators are proposing tougher laws against the industry and have issued billions of dollars in penalties for the violation of competition laws.

Read the complete article here.