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Update on Consumer and Civil Justice News

Happy holidays. With so many people on hiatus from last week until

January 5, we thought a brief recap of some recent consumer and civil justice news might be useful:

  • CBS News legal analyst Andrew Cohen responded to an absurd proposal

    from the U.S. Chamber of Commerce to President-elect Obama: the

    way to get the country back on track economically is to exempt companies from legal liability. Cohen analogized this

    selfish and short-sighted appeal to "child who kills his parents and

    then begs for mercy because he is an orphan." I like to think of it as a drunk driver who gets pulled over and then

    suggests to the police that the best way to resolve the situation would

    be to give him his keys back and look the other way while he drives

    himself home. Cohen recognizes this shameless argument for what it is:


  • Following the Fed 's recent enactment of new credit card rules, Sen. Robert Menendez (D-N.J.) called on lenders to comply with the reforms ASAP, rather than by the July 2010, date required by the rules. Other lawmakers have pledged to act quickly for more timely and comprehensive reforms. Last weekend, the New York Times editorialized that "promptly passing a credit card reform package" should be a priority for the next Congress.
  • Class action lawsuits have been useful to consumers challenging baseless early termination fees (ETFs) in cellular telephone contracts. A recent story in the Times

    reported on efforts by Sen. Herb Kohl (D-Wis.) to investigate rate

    setting for cell phone text messaging plans. Perhaps unsurprisingly,

    those rates appear to be as baseless as ETFs. In another similarity to

    ETFs, consumers have begun filing class actions over text messaging


  • New America Foundation's blog has been following

    an old but infuriating story about a shady student lending practice in which lenders, like Ohio-based Key Bank, partner with unlicensed and

    unaccredited trade schools, disburse student loan money to the schools,

    and then refuse to discharge students of their debts when the schools

    go out of business. There is an FTC rule

    designed to protect students in these situations. One way that Key Bank has been evading the rule and other charges of unfairness over its practices is by including Binding Mandatory

    Arbitration clauses in the promissory notes. Key Bank insists that

    these are old cases, and it has ceased student loan operations (for the time being), but Key also received $2.5 billion from U.S. taxpayers (via the U.S. Treasury) as part of the bailout package.

Meanwhile, we must wait until after the New Year for word on a potential economic stimulus bill. Until this week, all signs seemed to indicate that authority for judges to modify mortgages would be included as part of the package. Now that congressional Republicans have indicated a willingness to drag their feet,

the question appears to be not only whether the provision will be

included in the stimulus, but also when the stimulus will be enacted. 

Stay tuned.

Happy new year to all!