John Oliver Makes Robocalls Funny

I missed this Last Week Tonight segment because I’m a loser and I don’t watch TV. It’s not unfunny. And in fairness to the hardworking robots on the other end of the line, here is an industry lawyer’s response challenging some of Oliver’s arguments.

Hat tip to the excellent Consumer Law & Policy Blog for sharing these.

CFPB Finds that Elder Financial Exploitation is “Widespread and Damaging”

Cartoon Dangerous Criminal Insidious Cunning Thief Dressed In Da

Let’s do a quick thought experiment. Why did Willie Sutton rob banks?

Because that’s where the money is.

And who, by and large, owns that money at those banks?

Well, older folks. They’ve had a lifetime to accumulate it.

So should we expect to see older Americans victimized by financial exploitation?

Yes–and that is exactly what we are seeing. Since 2013, financial institutions reported more than 180,000 suspicious activities targeting older folks, involving more than $6 billion. And those reported cases probably represent just a tiny fraction of the estimated 3.5 million incidents of elder financial abuse that happen every year.

In February, the Consumer Financial Protection Bureau issued a report on elder financial exploitation. The Bureau analyzed Suspicious Activity Reports–SARs–filed by banks, credit unions, and other financial-services providers from 2013-2017. It found that elder financial exploitation was “widespread and damaging.”

  • SAR filings on elder financial exploitation quadrupled from 2013-2017–though they still may account for just 2% of actual incidents of elder financial abuse. For context, overall SAR filings increased by 40% from 2013-2017.
  • Financial institutions reported $1.7 billion in suspicious activities in 2017, including actual losses and attempts to steal older folks’ funds.
  • Nearly 80% of elder financial exploitation SARs involved a monetary loss.
  • Older adults lost, on average, $34,200. In 7% of the SARs, the loss exceeded $100,000. (When the financial institutions themselves lost money, by contrast, the average loss per filer was $16,700. So maybe the banks are doing a better job of protecting their own money than ours?)
  • People aged 70-79 had the highest average loss, $45,300.
  • Losses were greatest when the victim knew the suspect. And losses were even more common, and even greater, when the suspects were the victim’s fiduciaries (for example, an agent under a power of attorney).
  • The suspicious activities reported took place, on average, over a four-month period. So they were not, on average, a one-off thing.
  • In most cases, the SARs do not indicate that the financial institutions are reporting elder financial abuse to law enforcement or adult protective services.

What kind of scams are we talking about? The Bureau identified some common patterns:

  • Exploitation by a family member or fiduciary–for example, your agent uses a power of attorney to withdraw money from your accounts for his own use;
  • Theft by a caregiver–for example, a home-health nurse writes herself checks from your checkbook or using your ATM card to withdraw cash for herself;
  • Money mule–for example, scammers convince you to send money to help a relative in need overseas, avoid a problem with the IRS, help free the Prince of Nigeria, etc.;
  • Lottery/sweepstakes scams–a scammer tells you that you’ve won a huge prize or a long-lost relative has left you an inheritance, but you need to pay taxes in advance or otherwise send money to release it;
  • Romance scam–you meet someone online and start a virtual relationship with them, but they need money to travel to meet you in person.

If you think that you’ve been caught up in a scheme like this, it is important to act very, very quickly to fully protect your rights. The law gives you some important protections, but you need to act immediately to use some of them. At Johnson, Rosen & O’Keeffe, we’ve seen scams like this in our practice, and we have helped people get their money back–either from the scammers themselves or from the financial institution.

 

The bank froze my account. There’s no way that’s legal, is there?

One hundred dollar bill frozen in ice
We’re really hammering the winter theme on this blog.

This is a question that we get more often than you’d think. And we can only imagine how frustrating it must be to lose access to your bank account–especially if you have direct deposit and use that account to pay your bills.

Unfortunately, there’s not a quick answer. Whether a freeze on your account is legal will depend on a bunch of factors:

  1. Did the freeze result from a court order or law-enforcement activity?
  2. Did the bank provide any explanation for the freeze?
  3. How long has the account been frozen?
  4. What does your account agreement say about the bank’s right to freeze accounts? The freeze may be a breach of contract. Even if the account agreement purports to let the bank freeze your account under certain circumstances, that authority may be limited by the bank’s duty of good faith and fair dealing, or its responsibility under other laws. For example, improperly freezing an account could constitute conversion or unjust enrichment.
  5. Did the bank bounce one of your checks? If so, and if the freeze was improper, then the bank may have wrongfully dishonored a check that was properly payable.
  6. Did the bank decline a withdrawal via ATM or debit card? If so, it may have violated the Electronic Fund Transfer Act, 15 U.S.C. § 1693 (assuming that the failure to transfer funds as directed constitutes “an incorrect transfer to or from the consumer’s account” under the Act). The Electronic Fund Transfer Act establishes a lot of protections for consumers, including procedures and time limits for resolving mistakes like this.

For more detail on these points, see Lauren K. Saunders, Margot Saunders & Cathy Lesser Mansfield, Consumer Banking & Payments Law § 4.5.13 (2018).

Delegate Simon Introduces Student-Loan Legislation

Delegate Marcus Simon, a Democrat from Fairfax, has introduced legislation to bar anyone from acting as an student loan servicer without a license. The bill, H.B. 1760, would would prohibit qualified education loan servicers from

  • Employing any scheme, device, or artifice to defraud or mislead qualified education loan borrowers;
  • Engaging in any unfair or deceptive act or practice toward any person or misrepresent or omit any material information in connection with the servicing of a qualified education loan, including misrepresenting (1) the amount, nature, or terms of any fee or payment due or claimed to be due on a qualified education loan; (2) the terms and conditions of the loan agreement; or (3) the borrower’s obligations under the loan;
  • Obtaining property by fraud or misrepresentation;
  • Misapplying qualified education loan payments to the outstanding balance of a qualified education loan;
  • Providing inaccurate information to a nationally recognized consumer credit bureau;
  • Failing to report the borrower’s payment history of the borrower to a nationally recognized consumer credit bureau at least annually if the loan servicer regularly reports information to such a credit bureau;
  • Failing to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower, provided that the loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the borrower; or
  • Making any false statement of a material fact or omit any material fact in connection with any information provided to the SCC or another governmental authority.

Violations would be subject to a civil penalty of up to $2,500. H.B. 1760 would not create a private cause of action. It also would exempt banks, savings institutions, credit unions, and nonprofit institutions of higher education (public and private) from the licensing requirement.

The bill has been referred to the House Committee on Commerce and Legislation. Delegate Simon introduced similar legislation last year, and it never made it out of committee.

Some Cheerful Holiday Thoughts on Gift Certificates

Gift Certificate
These snow demons are fixin’ to break the law.

Gift certificates are great holiday gifts. Sure, they kind of say, “I care about you, but not enough to, you know, shop for you.” But they’re just so convenient. Your brother-in-law with an undergrad economics degree who answers phones for a living now might argue that gift cards reduce the deadweight loss associated with presents. His argument sounds plausible! That plus laziness is why I get mom a Maker’s Mark gift card and a box of cigars every Christmas.

But gift certificates and gift cards have given rise to some urban legends over the years. One is that gift certificates can’t expire. (This is not exactly true.) Another is that if you read the terms and conditions of an Amazon gift card in front of a mirror, Jeff Bezos will appear and do your bidding. (This is true, but dangerous.)

So here’s the deal: Under Virginia’s Gift Certificate Disclosure Act, every gift certificate needs to state either (1) its expiration date or (2) provide a phone number or internet address where the holder of the gift certificate can get information about the expiration date. A gift certificate issued by a Virginia merchant that diminishes in value over time must provide and internet address or phone number where the holder can get information about the current value of the gift certificate. For purposes of this law, a gift card is a gift certificate.

A violation of these rules is a breach of the Virginia Consumer Protection Act, which can allow an injured party to recover triple damages and attorney’s fees.

And under the federal Credit Card Accountability Responsibility and Disclosure Act–the CARD Act, get it?–a gift card or gift certificate generally cannot expire within five years from the date it was issued. The CARD Act also limits dormancy fees.

So there you go. Gift cards are reasonably safe and way easier than a real present.

Do Robocallers Dream of Electric Sheep?

retro robot on an old phone robot calls  toned image
He was very clear about my role here. About who I’m supposed to be loyal to. Guess you could call it . . . my core drive.

My kids call my mother-in-law Bebop. Long story. But relevant here, Bebop is not a shy woman. She has opinions. She likes to share them. And she does not have what my kids might call an “inside voice.”

Nor is Bebop a lonely woman. She has lots of friends and is very involved in the community.

And yet, as I learned this week, every few days she gets a call from a robot who starts their conversation by saying something like “DO NOT HANG UP THE PHONE.” The robot then tries to convince Bebop that it is a female human a calling on behalf of a consortium of other carbon-based humans known as the “Verizon,” and that this is Bebop’s FINAL NOTICE–

At around this point, Bebop engages. She and the robot talk over each other. Bebop explains that she would never hang up on the robot, in a tone that suggests offense at the very notion. She is a Southerner, after all. She was raised properly.

I assume the robot proceeds with its pitch, because the volume of Bebop’s voice starts to rise. The exchange makes less and less sense. Bebop politely but firmly asks to speak with the robot’s manager. Temper’s flare. A verbal standoff develops. I start to feel sorry for the robot. My thoughts drift to Blade Runner, then Westworld. What if it’s Dolores on the other end of the phone? Or Teddy? Dear, sweet Teddy?

Eventually, Bebop hangs up.

After seeing this narrative play out a few times, I tried to do Bebop a favor by adding her number to the Do-Not-Call Registry.

Turns out that she’s been on it since 2005.

This made me wonder two things:

  1. Will all these conversations be lost in time, like tears in rain?
  2. Are these robocalls illegal?

The first may be a question for the philosophers, but the second has an answer: Probably! The Telephone Consumer Protection Act  prohibits

  • Autodialed or prerecorded calls to cell phones and other sensitive numbers without the prior express consent of the called party;
  • Certain prerecorded calls (mainly telemarketing calls) to residential lines without prior express written consent; and
  • Telemarketing calls to consumers who put their names on the nationwide do-not-call list.

We’d want to know a little more about what the robot was trying to tell Bebop. But for purposes of our hypothetical, let’s assume it was telemarketing as opposed to, say, singing that song Mr. Langley taught it. If so, Bebop could sue under the TCPA.

Know-it-all defense types might try to tell you that Bebop lacks Article III standing under Spokeo because she didn’t suffer any harm. After all, the argument goes, she’s clearly a sadist who enjoys torturing the poor robot. I disagree with (at least part of) that argument, but that’s why my answer was “probably” as opposed to “heck yeah” or “Yahtzee.” We’d have to let the judge decide standing.

Turning the Tables: 5 Ways a Debtor Can Recover Attorney’s Fees in a Collection Lawsuit

Dice on a backgammon board close-upIn many cases, the scariest part of litigation isn’t the threat of paying a judgment if you lose; it’s the certainty of paying attorney’s fees and litigation costs, win or lose. This prices most normal people out of litigation, and often drives people and small businesses to settle lawsuits even when they are likely to win on the merits.

For this reason, many consumer-protection laws allow successful consumers to recover their attorney’s fees.

That’s all well and good when the consumer is the plaintiff–when they are bringing a lawsuit against an unscrupulous bank or business–but what about a debtor who is inappropriately sued in a collections action?

The National Consumer Law Center suggests a few ways that, with a little creativity, a successful Virginia debtor can recover some or all of his attorney’s fees through the following mechanisms:

  1. Rando statutes. Although Virginia law is overwhelmingly business-friendly, you can still find some helpful consumer protections scattered throughout the Virginia Code. For example, Code § 6.2-427 says that ” In any suit arising out of the use of a credit card, where the request, consent, or use as required by § 6.2-425 is denied and is not proved, and judgment shall be for the defendant, the court shall assess against the issuer all court costs and shall award the defendant a reasonable attorney fee.” Who knew?
  2. The contract. Most credit-card agreements are (predictably) one-sided, and allow the credit-card company to collect its attorney’s fees in the event of a successful collections action. But sometimes, these provisions are actually fair, and they let a debtor who successfully resists the lawsuit to recover her attorney’s fees. It’s always worth a taking look at the underlying agreement!
  3. Counterclaim. If the creditor engaged in unfair or deceptive acts or practices, you can file a counterclaim under the Virginia Consumer Protection Act or the Fair Debt Collection Practices Act. Those statutes allows the wronged consumer to recover attorney’s fees.
  4. Requests for Admission. See if your lawyer will served some Requests for Admission on the creditor under Rule 4:11. If the creditor denies those admissions (or forgets to respond) and you later prove them at trial, you can recover the fees you incurred in doing so.
  5. Sanctions etc. Finally, for really bad actors, you can ask the Court to award you your attorney’s fees as a punishment under Code § 8.01-271.1, or you can even bring a second lawsuit for litigation misconduct under the Consumer Protection Act or FDCPA.

The Ground Rules are Unfair

Tip The Scales Of Justice Concept As A The Finger Of A Person IlThis is a website about laws and legal decisions that affect consumers in Virginia. A had a professor in law school who would have called them “the ground rules for economic combat” between normal people and businesses like banks, credit card companies, payday lenders, and car dealerships–really, any company that sells anything.

First lesson: the ground rules are unfair. In the world of consumer financial services, Virginia is a remarkably business-friendly state. Virginia CLE tells us that the Commonwealth is the only state in the union without

  • A class-action procedure;
  • An unfair or deceptive acts or practices law for mortgage lenders;
  • Licensing or supervision requirements for sales finance entities; or
  • A retail or motor-vehicle installment sales act.

Virginia does have a law generally restricting unfair and deceptive acts and practices–the Virginia Consumer Protection Act–but that law is not nearly as powerful as the coordinate laws adopted by other states. And while consumers can bring lawsuits for fraud, the Richmond Metro line of decisions makes that extremely difficult in a case involving a breach of contract.

But things aren’t hopeless. This website will explore legal developments from the point of view of the consumer–the regular person–and suggest ways to level the playing field.