You're NOT dealing with the federal government. You're dealing with a former pizza restaurant manager in a basement room.

“We’re not playing here...You’re dealing with the federal government. You have no other options.”

Tom Cruise thriller?

Or debt collector talking to a disabled man about his student loan payments?

This being a consumer law blog, you correctly guessed it was the latter. That quote comes from a story on Bloomberg about student loan collectors leaning too hard on debtors. The debtor in question is disabled, and should have (under applicable rules) paid about $50 per month on his loans. Instead, he agreed to pay $220 per month and to do that, the story says the debtor (Campos):

Campos borrowed from friends, cut meat from his diet and stopped buying gas to drive his 82-year-old mother to doctor’s visits for her Parkinson’s Disease.

The story alleges that the debt collectors are "encourage[d]" to insist on high payments to get bonuses (remember how that worked for Countrywide?) and says the FTC got 181,000 complaints about student loan debt collectors last year.

(I wonder how many of those complaints were resolved in the consumers' favor?)

The story also notes that:

Federal-aid law requires collectors to offer “reasonable and affordable” payments, so debtors can “rehabilitate” their loans, repairing their credit and making good on what they owe taxpayers.

The law mandates no minimum payment for a borrower to enter a rehabilitation program, and collection companies may take borrowers’ finances into account.

I took a quick survey of lawyers and found not a single one (but me) knew that. So do you suppose the borrowers did?

Do you suppose the collectors were told about the law? I've deposed many debt collectors in my career -- and I've found that the training many times is pretty slim. And the incentives to pressure people are high:

Under Education Department contracts, collection companies “rehabilitate” a defaulted loan by getting a borrower to make nine payments in 10 months. If they succeed, they reap a jackpot: a commission equal to as much as 16 percent of the entire loan amount, or $3,200 on a $20,000 loan.

These companies receive that fee only if borrowers make a minimum payment of 0.75 percent to 1.25 percent of the loan each month, depending on its size. For example, a $20,000 loan would require payments of about $200 a month. If the payment falls below that figure, the collector receives an administrative fee of $150.

Remember my opinions about class actions and the like? Consider this:

[In recent history] Minneapolis-based Allied Interstate Inc. and Atlanta-based West Asset Management Inc. paid $1.75 million and $2.8 million, respectively, to settle lawsuits alleging abusive debt collection filed by the Federal Trade Commission. The companies admitted no wrongdoing. In February, to resolve an investigation by 19 state attorneys general, NCO Group, majority-owned by JPMorgan Chase, agreed to pay $575,000 and provide up to $50,000 per state for consumers who can show wrongful collections. The companies admitted no wrongdoing.

Let's see if THAT changes things. (It won't.)

If you've got student loan problems, SEE A LAWYER. For what Campos paid that student loan collector for one month, he could have met with me for an hour and I'd have told him to sue them for FDCPA violations -- potentially getting him enough money to retire his student loan debt entirely.

I make a better lawyer than a gardener, but all that changes this year.

This is a Sponsored post written by me on behalf of Scotts® for SocialSpark. All opinions are 100% mine.

Yesterday, I billed every minute of my day.  Literally: from when I walked into my office at 8:30 until I left at 5:05 p.m., not a single minute went unbilled: I was on the phone constantly, preparing for hearings, in hearings, and then preparing for other hearings.

That can be exhausting; it’s necessary - -so few other lawyers do what I do - -but it’s tiring. So I need a way to unwind, and last year, I tried gardening.  My two youngest sons and I got out in our backyard and planted a vegetable and flower garden… with little success.

We did everything right - -churned up the soil, pulled weeds, planted the seeds far enough apart, watered them, and in the end, we got a couple of weeds and something I thought might be a sunflower.

The problem, I think, is our soil. (It’s certainly not me, right?)  We have terrible soil around here: sandy, dry, hard to grow stuff in.  That’s why I was excited that I got a free sample of Miracle-Gro® Expand ‘n Gro™ Concentrated Planting Mix to try out this year.

Miracle-Gro® sent me a fee sample package of their Concentrated Planting Mix to try out. Probably because I’m such a big shot that my endorsement would be worth zillions to them.  Or, more likely, because they knew that I needed the help.  Whatever reason they had, I got the free sample, and I’m excited. 

This soil additive isn’t like others.  It’s got something called Expand ‘n Gro™ will improve the soil for up to three years, and which feeds the plants better than native soil, so using it can get me up to three times the usual number of flowers or vegetables.

It does that using something called COCONUT COIR, which is made from coconut husk. The coir fibers from places like Sri Lanka are compressed and added to the soil (that’s recycling: previously these fibers were simply tossed out, so using this stuff helps out two ways).  The fibers are lightweight and easy to use, but they help provide far more air and water for the plants. 

After spending a whole day in the office – never even relaxing once – I like to get outside in a nice yard and do some physical work. But what good is that if the garden doesn’t look nice? With this Miracle Gro, I’m betting this year I’ll see some results in that backyard.

Expand ‘n Gro™  is available at lawn and garden retailers in the Midwest, Northeast and Texas or at expandngro.com and Amazon.com. If you’d like your own sample, leave a comment – I’ve got an extra and I’ll mail it to the first commenter.

 

You might as well give it a shot, but don't hold your breath. (Consumer Matters)

The other day, a lawyer in my office brought in to me a letter he wanted me to look at. It was a bona fide HAMP modification - -a finalized, actual permanent HAMP modification.

It was also the FIRST ONE I've ever seen. In 3+ years of foreclosure litigation, I'd never seen a borrower get a HAMP modification before.

The complete lack of success of HAMP and related programs now joins things like "limiting credit card fees and thus screwing over the poor" as misguided government programs that were set up by bureaucrats and legislators without ever talking to someone like ME, who works with consumers, and without ever talking to consumers.

So forgive me if I am skeptical about the new "Consumer Financial Protection Bureau," a government agency that had its powers repeatedly cut and then had the original person who was going to head it, Elizabeth Warren, taken away.

But, for what it's worth, the CFPB exists, and while I have never -- not ever, I'll say it in caps, NOT EVER seen a single consumer helped by a government agency, NOT EVER -- you may as well spit into the wind and try calling it. It's open for business and apparently ready to answer your questions about stuff and junk.

According to The Consumerist, CFPB stands ready to answer your questions in three categories

The new Ask CFPB service allows people to do just that, ask the Bureau questions in any of the three following general categories:

Definitions: If your bank or lender is throwing around terms and phrases that you don't understand or want help clarifying, the CFPB will try to translate it into as clear a statement as possible.

Explanations: Need help understanding how the APR on your credit card is being figured? The Ask CFPB tool provides consumers with general information on and explanations of terms and features of financial products.

Situations: If you feel like you're at a disadvantage when you're talking to the bank/credit card company/mortgage servicer because they do this on a daily basis and you're just a regular Joe/Jill, the Ask CFPB service can provide you with information and tips to help you work through situations like when a lender raises the quoted interest rate at closing.

That latter one almost certainly constitutes legal advice and almost certainly will not be state-specific. In Wisconsin, for example, a last-minute raise in interest rates might be a violation of chapter 224, which regulated certain mortgage brokers and mortgage bankers. It might be a violation of section 100.18, which prohibits deceptive and unfair trade practices. It might constitute economic duress, which the Wisconsin Court of Appeals decided about 10 years ago could be used affirmatively.

Do you suppose the CPFB will know those things? I doubt it. But, sure, go ahead: Call them for information. Whatever keeps people from calling a lawyer upfront, when the lawyer could do more and things might not get so expensive, that's all right with me.

Really, it is: because much of what I take care of in my practice, complicated things that happen when people DON'T call lawyers first, or they go to a lawyer who doesn't know what he or she is doing. So the people at the CPFB, who should simply be strengthening private-attorney-general laws and educating judges about what they mean, are helping me keep my practice growing.

Just for fun, I went over to the "Debt Collection" section of the CPFB's and clicked on a question at random: "What information do debt collectors have to give me about my debt?" Here's the answer in its entirety:

Within five days of the initial contact with you, every debt collector generally must send you a written notice indicating the amount the creditor asserts you owe, the name of the creditor you owe, and how to seek verification if you dispute the identity of the creditor or the amount you owe. If you dispute the identity of the creditor or the amount you owe, you should request formal verification from the debt collector.

There's nothing wrong about that, per se. But it oversimplifies, misses the point, and omits details, including that if the information about the debt is in the original letter, no follow-up validation is needed, and that your dispute must be sent within 30 days, and, most importantly, that if you DO dispute the validity of the debt, the debt collector cannot do anything until they verify the debt -- but only if you dispute it within 30 days.

As the post title said: feel free to seek out the free advice of the CPFB and get what you pay for.

Franchise Clique is the only clique that would ever let me in.

So I had this killer idea for a new business: RAINBOW FRENCH FRIES.

What's the number one problem with eating french fries right now? They're bland. They're all the same color. BOOOOOOOOORING.

Look at candy: Candy is colorful. Cookies? Many of them are colorful. Rainbows? Colorful. and what do all those things have in common? That's right: they were all invented by Sir Isaac Newton.

As were french fries, which gets us back to my idea for differently colored french fries. Imagine, kids at a mall getting a pack of Rainbow Fries, and trading colors ("I like red the best! No, mauve!")(Yes, there will be mauve fries.) It's genius! Then, I can sell packs of ALL red, or ALL blue, etc.

(All good business plans finish up with "etc.," right?)

You may not be as creative as I am when it comes to million dollar ideas. That's okay. We can't all be me. In fact, I'm only me about 30% of the time. But that's okay, because there's a company out there that will help you get your business on: Franchise Clique.com

Franchise Clique can help you find the business that's right for you: they've got listings of businesses like Vending franchises coming out their ears. (Not literally. Websites don't have ears.)

The nice thing about opening a franchise? It's a business that's been tested. I mean, sure, Rainbow Fries is gonna be huge, but with an established franchise, you don't have to take my word for it: someone out there has built the company and it's worked in other locations and they have a whole package set up to help you: signs, logos, ads, products, uniforms. A franchise has that all worked out.

And Franchise Clique lets you find information on lots and lots of franchises in minutes -- with the ability to quickly contrast and compare and seek more information.

So here's what you can do if you're thinking of starting a business: You can venture capital my Rainbow Fries startup. (I figure I'll need about $1,000,000,000, cash only.) OR you can go to Franchise Clique and see if there's something for you.

(Starting a business is a big deal. Think it through. Talk to experts. And for God's sake, talk to your WIFE.)

The opinion speaks for itself? (Interesting Judicial Comments)

"Ordinarily we count on gravity to keep heavy items in place; and so when flour barrels, armchairs, and truck wheels become airborne we assume first that something has gone wrong."

Circuit Judge Rovner, ruling on a res ipsa loquitur claim in Maroules v. Jumbo, Inc., 452 F.3d 639 (7th Cir., 2006).

"The Next Call You Take May Be Your Last..."

Threatening people by text is a very ineffective way, I think, to find new customers for your business.

This post's case -- It's Satterfield v. Simon & Schuster, 569 F.3d 946, but call it The Case Of The Threatening (?) Text Message-- goes into not just when a person can sue over an unsolicited text message, but also the idea of Framers Intent -- that much-discussed, disingenuous argument that many people use to interpret the Constitution based on what they think the Framers of the Constitution would think about stuff like video games, but which is actually really more "What they think the Framers would think."

Here's the set up: A woman named Satterfield signed up to get a free ringtone for her cellphone, and agreed that to get that 'free' ringtone she would accept some offers being sent to her cell phone from the 'free' ringtone company and its affiliates.

Then she got this text:

"The next call you take may be your last . . . Join the Stephen King VIP Mobile Club at www.cellthebook.com. RplySTOP2OptOut. PwdbyNexton."

That is a pretty disturbing unsolicited text, and naturally, Satterfield did what so often people are reluctant to do when threatened by an unsolicited text message: she sued.

(Granted, she sued as a class action, guaranteeing that ultimately the benefits of the case would flow solely to the lawyers and defendants, but still, she sued.)

The defendant -- Simon & Schuster, you may have heard of them -- moved for summary judgment, arguing that it hadn't violated the Telephone Consumer Protection Act because the mechanism it used wasn't covered by the TCPA, and because a "text" isn't a "call."

First things first: The TCPA makes it unlawful for someone to

make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice—

to a cell phone or other service where the recipient is charged for the call

An automatic telephone dialing system is one which uses equipment that can

to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers

Simon & Schuster said their system, which used the list of cell phone numbers generated by the 'free' ringtone service as the targets for their Stephen King-novel-promoting series of threats, didn't qualify. The district court agreed, but the 9th Circuit reversed, saying there was an issue of fact about whether the system used could do those things - the inquiry being not did it do them but could it do them:

When evaluating the issue of whether equipment is an ATDS, the statute's clear language mandates that the focus must be on whether the equipment has the capacity "to store or produce telephone numbers to be called, using a random or sequential number generator." Accordingly, a system need not actually store, produce, or call randomly or sequentially generated telephone numbers, it need only have the capacity to do it.

Neither party had focused on that at summary judgment, and so the District Court had not, either, and had thrown out the case.

That ruling, I think, is important in a broader context. I am even as we speak appealing a summary judgment decision in a Wisconsin Consumer Act case; the decision was entered by a district court holding that the plaintiffs, my clients, hadn't produced enough evidence on summary judgment to get to a trial.

But we didn't move for summary judgment. And when the defendant (Home Depot) did, we defended by saying that Home Depot hadn't provided sufficient evidence to make us respond.

The district court's decision was "put up or shut up," which you hear a lot in federal courts -- when one side says "summary judgment!" the other side is supposed to throw their entire case into the record, whether or not the moving side has done much of anything. That's not how trials are supposed to work, and it's a perversion of the Celotex language. The moving side has to show it is entitled to a dismissal before the other side has to "put up," and Satterfield makes that clear: Here, the plaintiff obviously did not provide evidence, at summary judgment, that the system used could be an ATDS. Under my district court's reasoning, that plaintiff would have lost. Under the 9th Circuit's (correct) reasoning, neither side proved anything about the ATDS nature of the system, and so summary judgment favoring either was inappropriate.

Bravo, 9th circuit. It's a rare court these days that actually understands how summary judgment is supposed to work.

On to the "Framers Intent" part. Prong two of Simon & Schuster's attack was a claim that "a text isn't a call," and to determine whether that was correct, the Ninth had to look at not just the agency interpretation, but what Congress meant, since an agency can only interpret things the way Congress wants them to.

"Call" is not defined in the TCPA. That wasn't Congress being lazy; it was because when the law was passed there was no need to define what a call meant when talking about telephones:

The precise language at issue here is what did Congress intend when it said "to make any call" under the TCPA. Utilizing the aforementioned canons of statutory construction, we look to the ordinary, contemporary, and common meaning of the verb "to call." Webster's defines "call" in this context3 as "to communicate with or try to get into communication with a person by a telephone." Webster's Third New International Dictionary 318 (2002). This definition suggests that by enacting the TCPA, Congress intended to regulate the use of an ATDS to communicate or try to get into communication with a person by a telephone. However, this law was enacted in 1991 when text messaging was not available.

Remember 1991? I don't. Both the first Iraq war and Comedy Central were started, but beyond that, I'm in the dark.

So the 9th Circuit had to decide if those Iraq-war starting, Comedy Central watching 1991 Congressmen who had no idea the Internet or ringtones or text messaging would ever exist meant to guard against text messages. What did those shadowy figures from 1991 mean when they said call?

We also consider the purposes of the TCPA. The TCPA was enacted to "protect the privacy interests of residential telephone subscribers by placing restrictions on unsolicited, automated telephone calls to the home and to facilitate interstate commerce by restricting certain uses of facsimile machines and automatic dialers." S.Rep. No. 102-178, at 1 (1991), reprinted in 1991 U.S.C.C.A.N. 1968. The TCPA was enacted in response to an increasing number of consumer complaints arising from the increased number of telemarketing calls. See id. at 2. The consumers complained that such calls are a "nuisance and an invasion of privacy." See id. The purpose and history of the TCPA indicate that Congress was trying to prohibit the use of ATDSs to communicate with others by telephone in a manner that would be an invasion of privacy. We hold that a voice message or a text message are not distinguishable in terms of being an invasion of privacy.

I don't think they mean privacy the way I mean privacy. I think of privacy as people not knowing what I'm doing, not getting a call or text message. But the dictionary definition includes being free from disturbances as a definition of privacy, so I'll allow it.

With that, the Court upheld the FCC's definition of call as including text messages, because either disturbs you and invades your privacy.

(Note that email would not be subject to this, because you aren't charged per email. Which raises the question, for another day: What about people who have unlimited texting?)

Simon & Schuster's final defense was that Satterfield had consented -- because she said, remember, the 'free' ringtone company and its affiliates could send her text messages. But Simon & Schuster, the Court held, was not an "affiliate" of the ringtone company because the only connection between them was that Simon & Schuster had bought the ringtone's list of numbers. (And putting the ringtone company's name in the text didn't help.)

So Simon & Schuster had to go back and face a trial after all. But they didn't try the case. It settled by awarding individuals up to $175, and nearly $3,000,000 to the plaintiffs' attorneys. Satterfield got $25,000 herself, and other named plaintiffs got $5,000.

The irony of all this? The ad that was the subject of the text was promoting Stephen King's book The Cell-- about a cell-phone spread devastation.

A walk down memory lane: For 30 years, debtors have been trying to avoid liability by using the WCA... (Consumer Law Matters)

And for 30 years, it's been an uphill battle -- but not always for the same reasons.

I was, for reasons of my own, re-reading Matter of Ingersoll today, and was amazed to find out how few differences there were between this 1981 case and present-day WCA efforts. I suppose it's not so amazing that these challenges to the enforceability of credit agareements were made back then, when the WCA was new and there was some hope that maybe courts would be vigorous about enforcing it. That hasn't worked out so well: The most common reaction I get from judges to a WCA argument is "that can't be what the law says." I'd have understood that a lot better back in 1981, when nobody knew what the law said. Now, I'm stuck wondering whether what the law means now is because of how it was treated back then -- that is, whether, had judges in the early days of the WCA been more expansive in its interpretation (as they should have been), the law would now have more life than I and a few others are able to breathe into it.

Ingersoll borrowed nearly $300,000 from several lenders, and then, when he couldn’t pay,(in the words of the court) “removed” a foreclosure action to the seemingly-friendlier confines of the Western District of Wisconsin Bankruptcy Court, after which both creditors and debtor asked the court to resolve the validity of the claims made by the lenders.

Ingersoll’s complaints will be dealt with in order. First, he challenged the “dragnet clauses” that are both common and easily enforced in Wisconsin. The Court noted that Wisconsin allows dragnet clauses, and noted also that in Wisconsin, such clauses (which use property securing the instant loan to also secure future loans without a new security agreement) “would be closely scrutinized and would be enforced only to the extent that the future transactions or liabilities sought to be secured were in clear contemplation of the parties.”

Having declared that to be the rule, the Court then de facto interprets “close scrutiny” to mean “noting that the contracts contain dragnet clauses and quitting there”:

The language in paragraph (2) of the Ixonia Agreement explicitly refers to securing "debts, obligations and liabilities of any Customer to Lender arising out of . . . credit granted in the future by Lender to any Customer . . ." The Farmers and Co-op Agreements state: "to secure Customer's debts, obligations and liabilities to Lender arising out of existing or future credit granted by Lender to Customer . . ." Ingersoll makes no argument and presents no evidence that would rebut the inference drawn from the Agreements' language that the parties intended the Agreements to secure future loans.

The Court also noted that Ingersoll’s deposition showed that Ingersoll took out the dragnet clause loan to “beef up” his credit, and found that to support the inference that Ingersoll wanted future advances secured by present-day property.

The Court then summarily dealt with the second challenge, finding the contractual language allowed the property to secure antecedent debts and noting that Wisconsin had no rules prohibiting such an agreement.

Ingersoll then challenged whether foreclosure of his property was allowable as a remedy under the Wisconsin Consumer Act. The Court noted that foreclosure as a remedy was allowed if a right to cure was presented first (per the contract language), and held that with respect to one creditor, although the aggregate of loans owed to that creditor was $140,000 or so, at least one loan was below the WCA’s limit and since there was no proof a right to cure had been provided, summary judgment could not be granted as to that loan. The other creditors’ loans were to become the subject of an evidentiary hearing to show the “amounts and purposes” of each.

Ingersoll next challenged whether one creditor’s security was limited to $25,000 because the caption indicated it was a “Consumer” agreement limited to $25,000 or less. The Court compared that agreement with another one that lacked the caption, and , noting that Ingersoll admitted he had not read or relied on the caption in any way, held that the caption did not limit the security to $25,000.

Ingersoll then argued there was no consideration for his agreements. The Court noted that mortgages need no consideration, and that the documents were signed under seal, creating presumption that there was valid consideration. The Court held that the pre-existing debts were sufficient consideration in that the creditors continued to renew the obligations based on the security agreements.

Finally, the Court noted that the Truth-In-Lending Act provided no general right to void transactions, limiting its remedies to those in the statute: Ingersoll had argued that his right to rescind under TILA had not been disclosed to him and that therefore he could void the transactions. In addition to rejecting that claim (and ruling that the WCA provided no concomintant state rights to that remedy) the Court also pointed out that the Trustee in bankruptcy would likely hold Ingersoll’s claims for TILA damages if they existed.