Consumer Financial Protection Bureau

CFPB Considers Rulemaking to Limit Use of Arbitration Clauses for Financial Products

The Consumer Financial Protection Bureau (“CFPB”) announced it is considering proposing rules that would ban consumer financial companies from using arbitration clauses to block consumers from suing in groups to obtain relief.

According to the CFPB, arbitration clauses for financial products typically bar consumers from bringing class action claims through the arbitration process, and as a result, consumers injured by the same conduct must resolve their claims individually against the company, which is less efficient and rarely done.

The proposals under consideration would ban companies from including in their consumer contracts arbitration clauses that do not explicitly state that they do not apply to cases filed as class actions.  Consumer contracts affected by such a rulemaking would include credit cards, checking and deposit accounts, prepaid cards, money transfer services, certain auto loans, auto title loans, small dollar or payday loans, private student loans, and installment loans. The CFPB said it will convene a Small Business Review Panel to gather feedback on the proposals.

Consumer Protection

Sixteen Attorneys General Urge Flavored Malt Beverage Manufacturer to Lower Products’ Alcohol Content

Sixteen AGs wrote a letter to Phusion Projects LLC, urging the company to reduce the amount of alcohol in its flavored malt beverage product, Four Loko.

In the letter, the AGs state that one can of Four Loko contains 4.7 servings of alcohol with a 12 percent alcohol concentration, and thus consumption of one can by one person within a short period of time could constitute a binge drinking episode as defined by the Centers for Disease Control.

The AGs requested that the alcohol content of Four Loco be reduced to “the industry standard” of eight percent by volume for 24 ounce containers, which the AGs asserted will mitigate the “serious public safety risks” posed by the product.

California Attorney General Settles with Company for Alleged Privacy Violations for Recording Calls

California AG Kamala Harris reached a settlement with Houzz Inc, an online start-up platform for home remodeling and design, to resolve allegations that the company violated California privacy laws by recording telephone calls.

According to the complaint, Houzz recorded both incoming and outgoing telephone calls with home improvement and remodeling professionals, and in some instances customer calls and employee personal calls, for training and quality-assurance purposes from March 2013 to September 2013 without notifying or obtaining consent from all parties on the calls.

Under the terms of the settlement, Houzz must hire a Chief Privacy Officer and pay $175,000 in penalties and fees to the State.

Employment

New York Attorney General and DOL Sign Agreement to Collaborate on Enforcement of ERISA and Corresponding State Laws

New York AG Eric Schneiderman and the U.S. Department of Labor’s Employee Benefits Security Administration have signed an agreement to share information and work cooperatively to address violations of the federal Employee Retirement Income Security Act (“ERISA”) and New York laws governing health insurance plans.

According to the AG’s Office, the Memorandum of Understanding, will help protect the rights of participants in employee health plans by allowing the two agencies to refer cases to one another, conduct joint investigations, and assist each other with enforcement cases.

Environment

EPA, DOJ, and States of New York and Iowa Settle with Glass Manufacturer for Alleged Clean Air Act Violations

The U.S. Environmental Protection Agency (“EPA”), U.S. Department of Justice (“DOJ”), the States of New York and Iowa, and the California San Joaquin Valley Air Pollution Control District reached a settlement with Guardian Industries Corp. (“Guardian”) for alleged U.S. Clean Air Act violations.

According to the complaints, Guardian allegedly made major modifications to furnaces at seven of its float glass manufacturing facilities without obtaining the required federal Clean Air Act permits, without installing pollution control technologies on the furnaces, and without taking other actions required by the law when such modifications are made.

Under the terms of the consent decree, Guardian will pay a $312,000 civil penalty, install required pollution control technologies, and meet certain air pollution emission limits.

Pharmaceuticals

New Hampshire Attorney General Announces Investigation of Opioid Marketing

New Hampshire AG Joseph Foster announced that his office is investigating pharmaceutical companies for their marketing of opioids.

According to AG Foster, the investigation was launched to determine whether drug companies misled doctors and patients by deceptively minimizing the risk of addiction from long-term use of narcotic painkillers and exaggerated their benefits for treating chronic pain.

The AG has retained an outside law firm, Cohen, Milstein, Sellers & Toll PLLC, to assist with the investigation.