U.S. Consumer Bureau Loses Fight to Allow More Class-Action Suits
nytimes.com
nytimes.com
This is the part that gives me ulcers, and it's no exaggeration. So many companies insist on us giving up our 7th Amendment rights that we either give in, or don't fly, buy a car, or get a job. We can't even go to the competition because they also have mandatory binding arbitration clauses in their contracts.
As bad as the Equifax breach is, IMO this is a greater danger to our freedoms.
But this is just bottom of the barrel "you said something vaguely similar to a blog post I wrote a few weeks ago, here's the link with the oh-so-edgy title."
Plus, it can get exhausting to write the same argument over and over again. Half the reason I write on my blog or on medium is because I find myself repeating a certain argument and I decide to just write it once and for all.
But of course, you could always copy and paste with some small edits rather than linking. And I agree that it would be better to at least summarize the content of the post for us rather than just dumping the link.
EDIT:
It looks like the bottom of the article explains that the US Consumer Bureau studied arbitration and found it anti-consumer:
As arbitration clauses appeared in tens of millions of contracts, the consumer agency was specifically mandated to study arbitration under the Dodd-Frank financial law in 2010. That effort culminated in a 728-page report, released in March 2015, that challenged longstanding assumptions about arbitration.
The agency found that once blocked from suing, few people went to arbitration at all. And the results for those who did were dismal. During the two-year period studied, only 78 arbitration claims resulted in judgments in favor of consumers, who got $400,000 in total relief.
It's not clear what the denominator on that sum is, though it is also stated that the rate of customers taking up arbitration was very low
The loss of class action status is terrible and enabled atrocious corporate behavior.
Unless you are wealthy enough to do without or fine being homeless, this means you are living under a sub-government that the rules are set by corporations.
Legislative, executive, judicial - those are the three branches under the Constitution that are supposed to check and balance one another.
The legislature passed the federal arbitration act almost 100 years ago. It was signed into law by the president. And it has been consistently upheld by the U.S. Supreme Court in the face of many and varied court challenges.
In essence, the result of this century-old jostling is a body of duly enacted law that says that binding arbitration clauses are truly binding and therefore can be used in contracts to foreclose judicial proceedings by requiring that disputes covered by such clauses be resolved through arbitration. Moreover, a massive court challenge resulted in a holding of the Supreme Court saying that waivers of judicial class-action rights in favor of arbitration are also binding - meaning, it is neither unjust, unfair, nor against public policy (legally speaking) to say that consumers can be required to waive such rights and be required in all cases to arbitrate their disputes.
Now, one may believe that all of this is repugnant and grossly harmful to consumers. Others may disagree and may in particular believe that class-action lawsuits are primarily vehicles that help the trial bar and do little with their nickel-discount coupons to actually further the interests of consumers. Either way, the existing law is the existing law. The proper way to change it is to gain control of the legislative and executive branches and to repeal or amend the federal arbitration act. In that way, the law could easily and properly be shaped to forbid making arbitration mandatory and binding or limit the ability to use binding clauses in specific areas of law, etc.
The problem with CFPB is that it sought to carve out its own view of what is right and proper for consumers of financial services without regard to the intent of Congress in having enacted the existing arbitration laws. As established, CFPB is not accountable to Congress or any other form of traditional oversight of its bureaucratic functions (its structure was declared unconstitutional by the D.C. court of appeals). It is in that sense an organization that could be characterized as "rogue" based on traditional rules of governance and it is certainly seen as such by those who disagree with its particular actions in using its power to attempt to regulate arbitration clauses, payday loans, etc.
So CFPB essentially stuck its thumb in the eye of Congress in pushing forward with these measures.
Now Congress has struck back, saying, in effect (with its authority under the Congressional Review Act), "we don't like what this regulation does and this is our domain - therefore, we rescind it."
So, while one can try to say this is good versus evil, it is basically the legislature asserting itself on a matter of policy against a bureaucrat who it believes overstepped his proper role.
The result is to keep the status quo, nothing more. The rules in effect as a result of this action by Congress are the same ones that have governed arbitration clauses in every walk of life in American business for nearly a century.
For those who don't like it, that is fine. The ballot box is open as the prescribed means to effect a change. All this recent action amounts to is a declaration by Congress saying that this should not happen by bureaucratic edict. That may be bad policy, or it may be good policy, but it does uphold the rules of law favoring the electorally-accountable legislative branch over the authority of an unaccountable bureau chief.
If history is any indicator, in political systems this broken, other institutions collect power and either that power is sustained and relieves legal pressure or that power is revoked and the pressure builds until the system comes apart.
Just curious if you can give a good Western example for similar things happening in history?
I found striking parallels between the United States and China's Tang Dynasty. The Tang Dynasty was the most prosperous and influential era of ancient China, in terms of both culture and military. It was marked with culture fusion and immigrants from across the sino-sphere settled in its capital. During the early times of this dynasty, a meritocratic higher education admission system was first instituted to provide an avenue for upward mobility. Life was prosperous and Tang people were fat.
All of that started falling apart after 200 years of reign, and the late stage of the empire was dysfunctionalized by highly partisan power struggles between two fractions (https://en.wikipedia.org/wiki/Niu–Li_factional_strife). The meritocracy also failed, as the rich could afford better education and examination preparation, and the examiners gave preference to the applicants from wealthy families. You can call it the Imperial Chinese Ivy League legacy. The power of the throne waned, and the emperors were stuck between or murdered by warlords and eunuchs.
Tang Dynasty lasted a total of 289 years. If the United States survives 2065, then it beats Tang’s record.
As things grew more dire a succssion of more and more radical populist leaders attempted to change the system from within by standing for election but most were assassinated.
Generals like Marius and Sulla began skirting the law to move the law ahead as they saw fit but leaving the system intact. Finally, Julius Caesar came along with a promise to fix everything but by destroying the republican system rather than by conforming to it. At this point it's no surprise that many Romans no longer cared.
Every single sentence you wrote here is extremely ignorant of the political reality in which that usual proper process has been in the muck for years. You're not realizing the effect that gerrymandering, voter suppression, and money in politics has on the ability of the usual system to work to reflect the desires of people, and that redirecting people to traverse that maze is essentially sending them on a quest to square a circle that will effectively keep the status quo.
And the status quo isn't good enough. Remember, just a few years ago, someone would be denied healthcare due to pre-existing conditions and die. THAT was the status quo, and it was so toxic that the party in power now, controlling all parts of the three branches could not repeal it. Forced arbitration is similar to healthcare, most people don't realize how bad it is until they have to go to head with it.
This is an open and shut issue if the only thing you're worried about is the end consumer. The gov't, on the other hand, needs to worry about the system including the insurance companies. Changing the rules so that a person can forgo health insurance until they are sick is a sure fire way to start a death spiral.
It wasn't until the law was changed to include the individual mandate was the pre-existing condition clause even viable. I'd argue the individual mandate is so weak, that we might end up with a death spiral anyways.
What's the popular saying on HN? "Don't tear down the fence until you know why it was put up in the first place."
Until we fix the collusion between the American Hospital Association[0] and insurance companies through the National Uniform Billing Committee[1] to opaquely set pricing, there will be no free market in the healthcare industry.
[0]https://en.wikipedia.org/wiki/American_Hospital_Association
[1]https://en.wikipedia.org/wiki/National_Uniform_Billing_Commi...
Further, while the technology has advanced (eg cancer treatment for your dog), prices are much lower than what humans pay, and in some cases, declining.
Namely: - Inelasticity: economic terms, human healthcare is extremely inelastic, you'll spend everything you have to save your own life. Not so much with a pet. - Poor information: Because of so many middlemen, there is very little information for human healthcare, you rarely know how much something will cost before you owe it. - Non-Fungible: doctors are not a commodity that you can trade out like cereal. There are human relationships involved, that make it difficult to compare apples to apples.
These are all factors that human healthcare lacks that are generally necessary to make for an efficient market.
When corporations have become powerful monopolies (or regional monopolies) that trample on individual rights and captured regulators, should the citizens still respect the procedural correctness to its literal meaning? Or should we acknowledge that we have a flawed constitution, because while it checks the power of the government, the U.S. visionaries did not foresee the emergence of multinational corporations, structured in highly authoritarian ways, being able to influence public policy to great extent?
I believe we can agree that public goods are typically not as efficient as a _competitive_ private provider. But what if the market is not competitive at all? When ISPs/health insurers/hospital conglomerates essentially monopolizes different regions of the country, should the government step up and provide community broadband, single payer insurance or single provider healthcare? Or should we expect the government somehow being able to restore market competitiveness?
Republicans, on issue after issue, don't give a shit about conforming to proper legislative processes. To pretend they have converted, on an issue that happens to benefit Wall St, and which all Democrats voted against, is willful blindness.
It's like saying there's something noble about an arsonist refusing to burn down the forest in his own backyard.
Today, corporations want contractual "concepts" to only apply in one direction -- against the consumer. They expect to be able to strip away legal rights in their Terms of Service and End User Licensing Agreements, while also retaining the right to change ANYTHING at ANY time they please yet still have courts treat them like binding contracts.
What we need is a core set of consumer rights that are immutable.
It's absolutely both of those.
> but it does uphold the rules of law favoring the electorally-accountable legislative branch over the authority of an unaccountable bureau chief.
Who gave the bureau chief the power?
Dodd-Frank specifically required the CFPB to conduct a study on arbitration in financial agreements, and provided the CFPB authority to impose rules depending on the findings of that study. (12 U.S.C. § 5518, https://www.law.cornell.edu/uscode/text/12/5518)
The Federal Arbitration Act is not the only piece of duly enacted legislation in question here. Another peice of legislation -- one that was passed by both Houses of Congress and signed by the President of the United States -- was the Dodd–Frank Wall Street Reform and Consumer Protection Act.
A lot of bankers and their lawyers fought against Dodd-Frank tooth and nail. They were very happy with how things worked up until that point, thank you very much. Normally the American public doesn't have the attention span to thwart the bankers' lobbyists -- they are in there 24/7 lobbying for narrow concentrated interests and public interests on the other side are too diffuse and abstract to mount an effective defense. But in this case the stars aligned and legislation was passed. So the lobbyists moved on from stopping the bill from being passed to killing it afterwords in the regulatory process.
Where were the impassioned speeches about separation of powers and the will of Congress when bank lobbyists were busy eviscerating the skin-in-the-game rule?
Sure, Congress has every right to pass a law, which is what they did here, and override a prior law. But by the same token the Dodd-Frank Congress had every right to override the Federal Arbitration Act. This isn't a question of separation of powers, it's a question of public policy. Congress didn't stand up for Congressional prerogatives, they stood up for banks.
Or for others to exploit those whose political protection only can guarantee very little actual security.
Such others who will now be even more emboldened, to levy attacks against those whose last line of defense now lies with words scribbled on a piece of paper… No prescription from the modern day effectively political skinner box needed.
Actually, it's not the only way to effect a change. You can also spend millions on lobbying, smarty lawyering, slow but methodical creeping attack on consumer rights to effect change. In the 1940s, when the law was passed, arbitration agreements were not nearly as persuasive as they are today.
The companies enforcing these arbitration agreements aren't playing by the same rules everyone else is, they are changing the rules to their will, and then funding politicians to prevent and reversal.
...which was promptly vacated by the full Circuit and is awaiting an en banc decision. Kavanaugh's opinion wasn't exactly a masterpiece of juris prudence, and there are ways for the full circuit (and scotus if necessary) to make a decision on the issues without touching the constitutional questions.
As another comment notes, the CFPB was required by law to study arbitration and encouraged to issue a rule in line with those findings. The arbitration rule was far from an overreach.
The Federal Arbitration Act was enacted to validate B2B arbitration agreements: before then, and also for a considerable time thereafter, many courts were hostile to arbitration agreements — because, it's thought, judges didn't want private arbitrators encroaching on the judges' turf [0]. Also, when the FAA was enacted, consumers and employees generally didn't enter into contracts. The "scope creep" of the FAA has been due largely to the Supreme Court's literal interpretation of the Act, giving it priority over all contrary state statutes and practically any other federal statute that doesn't expressly state otherwise.
[0] See, e.g., http://scholarship.law.missouri.edu/cgi/viewcontent.cgi?arti... (a somewhat-passionate review of the history that generally comports with my own understanding from roughly 25 years of occasional practice in this area).
On the side of Giant Bank, they suddenly have 150,000 lawsuits filed against them and have to act in some way. Is that even allowed? Would a court just tell the law firm to go away and stop spamming it?
[1] https://www.nytimes.com/2015/11/03/business/dealbook/in-reli...
It also would force the courts dismissing the lawsuits to grapple with the sheer scale of criminality that the dismissals are being used to hide -- it's easy to hide it when you shut down a handful of lawsuits and the vast majority of your victims remain silent, but are judges going to be so accepting of mandatory arbitration when they've already, personally, dismissed thousands of suits because of arbitration clauses that are about the exact same kind of fraud perpetrated by the exact same people and have thousands more left on their docket? How many times do you believe that a judge can see the exact same crime happen from the same perpetrator and just go "Ho, hum, nothing to see here!" Sometimes, the key is just to be really noisy and annoying so they can't ignore the issue.
The act of filing the suits, particularly in a concerted bulk effort, and forcing the government to address and dismiss each individual suit is an effective form of speech and protest.
Your argument is shallow excuses for defeatism, which in turn excuses not actually trying.
Edit:
It also introduces a novel argument of "Uh, so this court has dismissed over 10,000 lawsuits about this exact issue -- clearly we're being abused by a corporation and petitioning the state for assistance. [Argument why the state is obligated to assist.]"
It forces the court to explicitly address the argument that the arbitration system is being coupled with a power imbalance to enable criminal action against entire states of people by documenting the scale via dismissals -- which are public record and can be used as evidence in subsequent cases.
That could only work if people actually filed the lawsuit. However, filing a lawsuit isn't free (as the below random website attests [1]). If it's a near certainty that the lawsuit will be dismissed, few people are going to want to pay $320 (plus any other costs) to file it.
I'd like to hope people have the principle to bang their heads against the courts until they take (the proper) action, but I'm pessimistic.
Honestly, maybe novel political solutions are the answer? Could a state pass a heavy tax on binding arbitration, to be paid by the party that required it?
That said, if you're willing to risk all that to make a political statement - i.e. to pressure legislatures to change the law around arbitration - I can't rule out that it could be effective. But I suspect that other avenues for making a statement would be cheaper and more effective (and avoid the stigma of abusing the court system).
For example, how about just taking out TV ads? Find some maximally sympathetic victims of the arbitration system, and have them tell their stories. Less dramatic, but right now I think there isn't all that much public awareness of the issue - the New York Times' series notwithstanding. Arbitration is such a classic "big corp screwing over the little guy" story that I think a large number of even Republican-leaning voters would oppose it, especially the Trump camp (ew, but still), if they heard the full story. But most of them have probably never heard of it, or have only heard one-sided accounts that emphasize how class-action suits cost businesses and don't usually win plaintiffs all that much money. (Both of which are true, but ignore the fact that class actions are effective at holding defendants accountable for violating the law, and getting them to change their behavior - whereas a trickle of arbitration cases can just be dismissed as a cost of business.)
I tend to think that wrench throwing is more effective for systemic problems than discussing it. The assembly line is doing damage while you discuss the problem.
That said, I'm also biased here: the lawsuits idea hits two of my pet peeves, in that it also forces debate around the issue of the justice system being chronically understaffed and underfunded.
Filing that volume of lawsuits would effectively DDOS the courts (which is why they're going to hold you in contempt no matter how legal it was), but even doing due process on your contesting of that would likely drown the justice system to the point it forced a national debate over how it was operated.
That's a resonant issue with the arbitration one, since the forced arbitration is a symptom of that deeper funding issue -- we don't invest in efficient civic infrastructure, so corporations built their own.
tl;dr: Two birds, one stone; forcing instead of discussing; debating the underlying issue, not just a symptom.
This is literally the Christian version of "Sharia Law", which seems to be a boogeyman of the conservative right. Unbelievable.
This sounds fairly similar to how the Church of Scientology blackmailed the US government into giving it tax exempt status. They filed millions of lawsuits against every IRS employee and drowned them in it until they gave in. It worked out extremely well for them, so it may work out the same in your example.
If you want to have a small government without an effective consumer protection agency then you'll need to ditch mandatory arbitration and permit the class actions to flow.
1. I stopped using the card for several months.
2. I then used it once on a small purchase.
3. They stopped sending me an e-mail reminders for my bill. (An "error" in their system disabled e-mails for my account specifically)
4. I racked up about $100 in late fees and interest charges.
5. I called them up and they said they'd waive the fees and interest charges.
6. They did not waive the fees and interest charges.
7. At this point, I had to give up and pay it because it was about to go to collections and damage my credit rating.
What recourse is there for this kind of thing if the GOP doesn't allow us class-action lawsuits?
Anyways, later.
While I don't typically support a liberal use of chargebacks, a situation where you actually didn't purchase the thing you were charged for, and the vendor is not cooperating, is kind of what they are meant for.
The whole "never discuss politics or religion" trope is one of the things that gets society in a place where a few people have a disproportionate voice in how the place is run.
Politics is how problems get solved because politics is how society communicates on issues, it may not be working right but thats what it is, it is our sole way of governing our society.
Hens, please stop electing foxes.
Or just refuse to pay, and realize that a $100 charge from one vendor doesn't harm your ability to obtain credit.
Here's the White House statement on it.
From https://www.whitehouse.gov/the-press-office/2017/10/24/state...
> Statement Regarding Senate Passage of H.J. Res. 111
> President Donald J. Trump applauds the Congress for passing H.J. Res. 111, Disapproving of the Consumer Financial Protection Bureau's (CFPB) Arbitration Agreements Rule. According to a recent report by the Department of the Treasury, the evidence is clear that the CFPB's rule would neither protect consumers nor serve the public interest. Rather, under the rule, consumers would have fewer options for quickly and efficiently resolving financial disputes. Further, the rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers. By repealing this rule, Congress is standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefited the most from the CFPB's uninformed and ineffective policy.
It seems that they're basing this on a report by the DOT (which is the parent body of the CFPB).
Here's the report (I'm still parsing it):
https://www.treasury.gov/press-center/press-releases/Documen...
The CFPB's response (quoted all over the place): "rehashes industry arguments that were analyzed in depth and solidly refuted in the final rule."
I can't find a source for that response. It would be great if we could find a source for that response as well as the wording of the refutation in the "final rule."
This is actually retarded. How is arbitration OR trial less options than just arbitration? Last I checked, 2 > 1 but maybe I need to review my math skills. Just because a company can't force arbitration doesn't mean it isn't still an option.
The Whitehouse is just flipping words around to make it seem like a win for consumers, but their reasoning is just a blatant lie.
Translation:
Someone paid enough of us a good deal of money to make it so they can't be sued in court. Good luck, suckers.
I would actually try to understand the reasoning from the DOT and then look at the rebuttal from the CFPB before I make statements like this.
If it's as simple as you state, 1 options instead of 2, why hasn't anyone else picked up on this blatant lie?
Well we clearly can assume, but it doesn't make us right.
Neither have I seen where the simple statement "one option is less than two" is published by any media outlet.
That is not what is claimed. The CPFB banned financial products and services from using arbitration over class action.
This is what that document from the DOT says.
>Against this background, in July 2017, the Bureau issued its final rule (the “Rule”) prohibiting consumers and providers of financial products and services from agreeing to resolve future disputes through arbitration rather than class-action litigation.
1. They project 3,000 extra class actions will happen as a result of allowing class actions. The businesses receiving them will spend a lot of money on lawyers and settlements. They say the businesses probably won't absorb the damage for these claims. They might charge customers more. So, profit-hungry companies being hit with class actions will charge their customers more while benevolent ones won't and those not doing whatever actions cause class actions will be cheaper. Good companies, at least in court terms, will be cheaper.
2. Few (13%) of the class-actions result in relief to those affected and suing. They project four in five cases will provide no relief. This ignores a huge reason for class actions: making companies doing bad things lose enough money to change their practices. Class-actions have been far more successful at this than individual lawsuits or arbitrations due to the dollar amounts in No 1.
3. In class-actions that generate class-wide reliefs, few customers actually claim the funds they're offered. The report thinks this means the class-action was worthless. Again, ignores the value of getting justice and changing corporate activity in No 2 which might have been consumers' goal all along.
4. The plaintiffs' attorneys will make a lot of money doing the class-actions. Businesses being hit with class-actions will pay out an extra $330 million to their victims' attorneys. So what. It's a separate issue. The plaintiffs are still going for class actions so clearly they find this better than not doing the class action. The big companies are also fine with shelling out millions on attorneys and lobbyists to do what benefits them. Consumers will let those people make money to benefit them, too.
5. This report ignores the effect of meritless lawsuits. Defendents often settle just to avoid more damages. This is a general problem that. I'll also note that the kinds of companies often hit by class actions similarly push problems on people hoping most won't sue for extra damage. They're actually doing that right now by forcing arbitration. I feel little mercy for them.
6. The report claims the rule will not improve compliance by companies with rules or norms that benefit consumers. Claim there's been no improvement in class-actions over arbitration events. This is possible but not a disqualifier. The data I've seen shows class actions have changed corporate behavior before. I've also seen class actions or just big lawsuits that have had little effect. There's certainly no guarantees one method of justice and/or redress will accomplish its goals. That's also certainly not a reason to get rid of it.
In the analyses, the report also compared benefit of class actions versus arbitration supporting customers might want the benefits of arbitration. I may have skimmed over something but it seems they're ignoring the mandatory... no other option... part of arbitration status quo when consumers prefer to be able to do either option. If I didn't miss something, that would be misdirection in the report like how they ignored the punitive, market-changing effect of class action to focus entirely on money-making aspects.
Then, they do it again in the next report on cost-benefit analyses. They seem to just focus on money making and losing with no concern for consumers' right to essentially not be abused by collective industry behavior. The consumers didn't want mandatory arbitration to be deployed across the industry. The net benefit was companies kept their profits higher when they abused consumers. That's what the ban of mandatory arbitration is about. The cost-benefit analyses ignores this entirely.
So, this report seems to only look at money making, ignores what consumers wanted, ignores how the financial industry was shoving arbitration down consumers' throats to benefit at their expense, ignore consumer demand for justice against big companies being accused, and further argues against class-action on specific damages defendants will be hit with. This is definitely some kind of propaganda to support with little evidence the anti-consumer action of supporting mandatory arbitration clauses.
I have an alternative that addresses most of the financial damage in the report: the companies can stop doing financially-damaging or deceptive things to consumers that make such large numbers take action against them. There's lots of companies in most sectors that don't. They don't get hit with class actions. Instead, they get referrals from satisfied customers. Whoever wrote this report should look into that sort of thing. Might be worth drawing attention to.
How am I considered a consumer of Equifax? Aren't the consumers the people that use Equifax to check my credit? When did I ever enter into an agreement with Equifax that binds me to arbitration?
Congratulations. You no longer have access to the court system.
The problem with the snarky, knee jerk response to class actions that you have is that most class actions are instances where individuals aren't harmed for much, but together it's quite significant.
And I have absolutely no faith in private arbitration to do anything but find for the entity paying their fees.
Actually, you're a provider to Equifax, in the form of the data trail they're ingesting.
A pretty good WashPo item (by way of Outline because fuck WP's nagwall) spelling this out:
Funny how "Fuck you, pay me" is an acceptable sentiment when you're a freelance software dev, but now when you're a journalistic institution.
A topic I've addressed (and cited people who do not manifest on the Internet as Space Alien Cats, including Joseph Stiglitz) numerous times. And you can read for free!
https://www.reddit.com/r/dredmorbius/search?q=information+ma...
Or this yesterday on HN: https://news.ycombinator.com/item?id=15540536
NY Times has a similarly annoying practice of disabling copy/paste from articles (trivial to get around on various browsers, but not Chrome/Android), so I frequently point to Outline for that as well.
I sympathise with the problems of publishers. But I've also done a lot of research and thinking on this, and they're fundamentally fighting a losing war.
Either go fully behind a paywall (and suffer the consequences of that), go nonprofit (see ProPublica, ICIJ, NPR/PBS), find a patronage option, or ... well, I don't know.
But the system we've got (and which a great many HN folk are directly participating in, as I have myself) SIMPLY. IS. NOT. WORKING.
(It's one of a bunch of things that aren't working presently, though it ties in to many of the others in particularly distressing ways.)
Suppose for a moment that the Equifax hack was carried out by a nation-state (like, say, North Korea). This is not an issue of consumer trust and safety. It is an issue of national (US) security and safety.
To give another analogy, imagine that in 1920, the Canadian military marched over the border and robbed some banks. Does it make sense for the patrons of that bank to be able to sue the bank? Maybe. It seems like that's less of an issue than the fact that Canada has seized assets that belong to US citizens.
My point is not that Equifax is innocent, or that the situation is being handled appropriately, but rather that this whole thing looks weird enough that there it's probably a lot worse (and more complicated) than we think it is.
Most Fortune 500 companies do not have bug bounties and have poor security. One was exploited using a disclosed vulnerability.
This is on the polar opposite side of the spectrum of things that would give you the idea of nation state, before ruling everything else out.
When national security claims protect your six, rational actors eventually will seek to exploit such…
A server with an IP in Russia = Russian Hackers = State Sponsored Russian Hackers = Vladimir Putin destabilizing Democracy
While you are eating popcorn and have millions of dollars of cryptocurrency no questions asked.
You can argue you were coerced into giving it to them. But at the end of the day, you signed bank and credit card and employment agreements that let your information be transmitted.
(How many places wouldn't un-hire you as soon as you insist they can't pay your bank account because you don't have one?)
The widespread use of forced arbitration seems ripe for examination by the SCOTUS. I'm no lawyer, but it seems like a fairly blatant violation of the 7th amendment.
Given the current makeup of SCOTUS, I wouldn't hold your breath, sadly.
(Although I would like to hear Gorsuch claim that since the constitution didn't say anything about forced arbitration, it's out of the purview of SCOTUS. If only to hear him slapped down by RBG again.)
https://www.classdefenseblog.com/2015/12/supreme-court-holds...
The resources of a nation state were not required to hack equifax.. a kid with a laptop could have done it.
This is a consumer trust and safety issue because basic care was not taken to protect the data that Equifax was trusted with guarding.
If it turns out that a nation state is the one that carried out the hack.. then that's a national security issue AND a consumer trust and safety issue. But that doesn't excuse gross incompetence.
To blame a foreign nation for printing your money is then not the right action. You'll have to look inwards.
That's the only way to send a message strong enough that if you are going to operate an IT business, which is what Equifax is, and you have poor security, you will not be protected by the government.
In fact, protecting Equifax and other companies who fail to properly maintain adequate security will send a message to other corporations that this kind of behavior will be tolerated, and these companies may be incentivized to not invest in their security. I've seen situations exactly like this play out at companies before. If the rules of the market suddenly change, so will the industry.
And why should we risk the stability of an entire industry because of one company? The security problems aren't going away, even if we decide to create laws that say they don't matter -- they will still be there at the end of the day, and someone will be able to exploit them. It's bad for business, bad for consumers, and ultimately bad for whatever government is foolish enough to create such policy.
And at the end of the day, there is some amount of basic deterrence for people who are not in some kind of adverse mental state. How many more crimes of passion would there be if murder, or assault, were not so harshly penalized? The “deterrence does not work“ line as a matter of degrees, not absolutes, and only applies to a subset of the population. For the rest of us, it works just fine.
So to re-join the topic at hand, think of it this way: there will always be outright criminal corporate actors, and deterrence by corporate death will never stop them. These are the Bernie Madoffs and Jeffrey Skillings of the world. Their corporate actors, however, only act the way they do because they are simply are no consequences for doing otherwise, and upper management has evidently quashed their consciences entirely: AT&T (selling deanonymized data with token, non-retractable consent), BP (Gulf oil spill), Equifax (not caring about your security). Lest we forget that these businesses are in the business of making money, and they do so with terrifying efficiency, and their management is soullessly shrewd. If something is risky and expensive because it entails a high chance of a lawsuit or some other penalty, they will think twice about it.
That is, the crime is conducted for direct financial gain (various black markets, theft, burglary, fraud), to defend a criminal enterprise (turf wars), to gain resources to feed some criminal activity (drugs and gambling addictions, especially), or as a consequence of economic marginalisation (people pushed into desperate situations, or engaging in activities on account of those).
(There's also a tremendous amount of white-collar and corporate crime which is never prosecuted, a whole 'nother story. The dumb criminals are the ones who get caught.)
Even various forms of tribalistic / hate crimes are often related (with varying levels of justification, having a floor of zero) to economic perceptions. As are crimes of passion or pride or reputation.
There's not a whole lot of crime that isn't at least arguably connected to some economic motive or dynamic.
If you have no choice of where to shop, and you have no recourse for making yourself whole when your only vendor abuses their monopoly power, that is not an “efficient“ free market.
Because that is ultimately the cover they use for all of this deregulation. “Deregulation hurts business“ is the only argument I have ever heard in favor of this kind of policy. But that is such an obvious lie at this point. That it seems they aren’t even trying t pretend policy has an economic basis anymore. But apparently the damage to the public’s ability to form an opinion has already been done.
I'm not sure that's a good argument for the free-market. We just have to suffer security breach after security breach until companies clean up? It seems like a total willingness to admit security failures in the first place where regulation could help us here.
But, fortunately for Equifax, companies that manage social security numbers haven't been declared critical infrastructure. If they were, I'm sure Equifax could have been found guilty of gross negligence.
The international law on this is rather complicated but I believe that those affected would have a case against the Canadian government, as well as being covered by the US bank insurance system.
However, in the case of Equifax, personal data isn't the property of the person (in the US system) and so you don't have a case. You'd need to have an EU-style data protection system rather than a US system which treats data as free speech.
It would be the mounties robbing the banks and then threatening to return with greater force if we show any attempt to recoup losses from canada, but then we steal their lumberjacks, then they strike out alaskan oil sites, oh boy are we at war?
National security advisors have long indicated civilian infrastructure to be the primary cyber vulnerability, not military assets. Its the german ballbearing factory all over again.
So to not hold these companies liable is genuinely generating a national security threat, where threat is defined as a risk with a real probability of being realized.
Let's imagine two different bank robberies, carried out by the same wicked bank robbers.
In the first, the bank robbers steal a bulldozer and a crate of dynamite, knock down half the bank in the middle of the night, blow the safe, and run away with the money.
In the second, the bank has left the safe and all the doors unlocked at the end of the day when everyone goes home. The robbers stroll in through the open door, take the money, and casually walk away.
In both situations, the robbers are fully culpable. They don't get a pass just because the money was left lying around where anyone could take it. They should be pursued and an appropriate punishment (or rehabilitation, if that's your thing) should be meted out in either case. But in the second scenario, the bank is also culpable - they failed to take reasonable precautions, they were negligent in their duties.
If someone is negligent in their duties and that negligence results in harm to others, they should be held responsible for it. The situation doesn't change if it was a nation-state that took advantage of the negligence; the hypothetical bank aren't being punished for being robbed, and it doesn't matter that a hypothetical determined robber could still have broken through nearly any security you could imagine, they were still negligent in their duties.
If they left the doors unlocked and didn't bother to hire security then sure.
(2) It takes skill and savvy to make money. Overweighting their influence will produce a fitter society. (Interesting aside: British university graduates and property owners got double, sometimes triple, votes through 1948 [1].) Counterpoint: this requires high intergenerational income mobility. A lack of mobility from the lower classes up is a problem in the long run, but a lack of mobility from the upper classes down is toxic in the short: you'll have idiots with tuborcharged influence.
As to lobbying, that's unavoidable in a democracy. You will need insiders to explain the system to legislators. Banning lobbying means forcing the legislature to make decisions in the dark.
[1] https://en.wikipedia.org/wiki/Plural_voting#United_Kingdom
Also, wealthy people will almost always prefer pro-small taxes politicians, on either party. So they will fund either Republicans or Democrats that think that way (especially with Democrats that have a "public position and a private one").
Allowing money to decide rank in society is what we normally call corruption, because it also bypasses laws, like when rich people get away with crimes, because they have money and influence. That's not how it should work, right? Similarly, I very much doubt that having mostly rich people buying politicians is how a democracy should work, too.
> That's not how it should work, right?
That’s a big question. I don’t think it’s safe to presume it’s answer.
I'm sure if we gave felons a vote that counted as 1/2 a non-felon plenty of them would vote.
I think a system where your vote starts at 3/4 value in state elections and increases to 1 after you've been a resident for 10yr. Weighting the opinion of a newcomer less is pretty standard in pretty much every group decision other than voting.
2.5% of voting age Americans cannot vote, because of felony sentences. In some states (Florida) it can be as high as 10% of the population. Is some states (e.g. Florida, Alabama, Virginia, Mississippi) over 25% of voting age black male population cannot vote.
In most European countries, also felons and prisoners are allowed to vote.
https://books.google.com/ngrams/graph?content=one+person+one...
Lobbying is literally talking to people in power. It involves money because advertising and marketing aren't free. A special interest group is literally a group of people who want to talk about a particular set of issues.
So to return a question, what are some plans for limiting lobbying and money that don't violate the rights to petition, assembly, and speech? Minus points if the new rules help incumbent powers erect new barriers to talking to elected officials.
It would do the most harm to interests that pool resources from large groups of regular folks, like unions or environmental groups.
It harms oil lobbyists and big ag and tobacco and all those industries in exactly the same way it's going to hurt the Sierra Club. I'd still call that a win for the little guy.
>That would bias the process in favor of rich people who can afford to spend a week hanging out in DC meeting with members of Congress.
The process is already biased in favor of rich people and I don't see a reasonable way to make it not favor rich people - I'm just saying that this would favor rich people less than our current system. I prefer a system where some CEO has to actually go talk to Senators for a week than a system where a few slick-haired individuals run around the hill year round.
It would not, because under your rules an industry executive could draw a salary while talking to government officials because they would be pursuing their own self-interest in doing so. But a Sierra Club employee could not because the sole purpose of the Sierra Club is to represent the interests of other people (their members).
A rule that prohibits a person from getting paid to represent other people would hurt representative organizations (nonprofits) more than rich individuals and for-profit companies.
>A rule that prohibits a person from getting paid to represent other people
That's not the rule. The rule is you can't get paid to lobby. An executive drawing a salary when his job is primarily talking to congress people is obviously lobbying. To put a finer point on it you're making a distinction between (1) a corporate executive who receives compensation from his corporation speaking to a congress person because it is in his personal interest to advance the interests of his corporation and (2) a Sierra Club executive who receives compensation from the Sierra Club speaking to a congress person because it is in his personal interest to advance the interests of the Sierra Club. They're the same thing, if one is affected so is the other.
Meanwhile the entire purpose of advocacy organizations like the Sierra Club is to lobby. So if they can't pay people to lobby, they have no reason to raise money, and no way to spend money if they do raise any. Under a rule that prohibits getting paid to lobby, orgs like the Sierra Club simply cannot exist at all. There's no business model.
Anyway, the law is crystal clear that such a rule would be unconstitutional. People don't give up their rights just because they pool resources or get paid. Paul Krugman and David Brooks still have free speech rights even when they're getting paid to write columns.
Then they do the same thing and go do it on their vacation. To me it seems obvious that the money for lobbying exchange that happens in our society benefits the wealthy more than anyone else so ending it is good. It moves the power dynamic from one where lobbying power is determined by money to one where lobbying power is determined by manpower. Now obviously it doesn't completely shift that dynamic by itself but it seems like a vital reform among others.
>Anyway, the law is crystal clear that such a rule would be unconstitutional. People don't give up their rights just because they pool resources or get paid. Paul Krugman and David Brooks still have free speech rights even when they're getting paid to write columns.
No it's not because it's not limiting your speech, it's limiting your ability to get paid for speaking. Like with the kidney example - our laws against buying/selling a kidney don't make having a kidney illegal - you can walk around all day with a kidney - you just can't sell it. Same thing with my rule - you can speak to congresspeople all day, you just can't get paid for it.
Ultimaist defenses of individual rights, vs balancing rights, ends up with ridiculous conclusions like “money equals speech”.
To fix is to reduce (or eliminate) the cost of campaigning. Mooting the whole problem.
I think messing around with campaign spending has similar issues to getting rid of lobbying. But making campaigns smaller and cheaper (by making local campaigns more important) could do the trick.
Campaign finance is tricky stuff.
They do have one very strong value though. They act as a solution to the concentrated benefit diffuse cost problem.
The large take of a class action is essentially a honey pot that draws action when most of us would just put up with the problem because it represents a personal cost too small to care about.
"the rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers."
http://www.npr.org/sections/thetwo-way/2017/10/25/559950275/...
It looks to come from a statement from the White House:
> Statement Regarding Senate Passage of H.J. Res. 111
> President Donald J. Trump applauds the Congress for passing H.J. Res. 111, Disapproving of the Consumer Financial Protection Bureau's (CFPB) Arbitration Agreements Rule. According to a recent report by the Department of the Treasury, the evidence is clear that the CFPB's rule would neither protect consumers nor serve the public interest. Rather, under the rule, consumers would have fewer options for quickly and efficiently resolving financial disputes. Further, the rule would harm our community banks and credit unions by opening the door to frivolous lawsuits by special interest trial lawyers. By repealing this rule, Congress is standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefited the most from the CFPB's uninformed and ineffective policy.
And it seems that the DOT report is more important the the "Further" part. At least that is what "Further" implies in their statement.
What did the DOT report say? I'm reading through it I suggest you (and others) do as well.
https://www.treasury.gov/press-center/press-releases/Documen...
I think you mean removing rules that clearly constrain?
Edit: don't understand the downvotes. I'm answering the poster's question but it doesn't reflect my personal opinion
No, in theory anyone can negotiate the terms of their own contracts.
> It seems strange to me that legally only one side of a contract gets to pick all the niceties.
These are called "contracts of adhesion" (i.e. take it or leave it terms) and are subject to slightly stricter interpretive standards than fully negotiated contracts. It would be impossible for a very large company selling consumer products to have lawyers reviewing every consumer contract because the cost would likely exceed the revenue for each contract, never mind the profits. So it makes sense that it's allowed, though in theory we should be using regulators to ensure that they aren't abused. We don't do that, though, hence the current case.
>Could as a consumer not add an arbitration clause to every contract you are handed with the same requirements except you get to pick the arbitrator?
Not really. You could manually modify a contract by crossing out terms in pen, but that's only enforceable in cases where the other party also signs the contract. As opposed to most consumer contracts where you sign the boilerplate you are given but the company doesn't then cosign that same copy. In some jurisdictions, even if they sign the same copy, they have to initial the changes for them to be enforceable to stop people from sliding things into a large contract on the sly. But you could certainly try this with a larger personal contract like a car purchase or home rental agreement. I personally do not recommend trying to slide things in without the other party noticing, but it's always worth negotiating if you think they are willing and the modification is worth pursuing.
How do you do that when the contracts are fundamentally entirely one sided (we can change it whenever we want).
Not quite, but give them a few more years in power.
Deregulation is fine if you strengthen the ability of citizens to obtain redress through the judicial system. If you weaken that ability, or it is weakened, you increase regulation.
But they're both deregulating and restricting judicial redress, which only increases power of those who don't need it.
Companies either are liable or not; these clauses preventing class action lawsuits seem baseless to me.
I'd go even further and say corrupt and evil. Yet these baseless clauses have been around long before the modern GOP, so while I agree with your sentiment, I'd broaden it from "GOP" to "greedy corporates and their government puppets from any political party."
[0] And yes, most did it for political reasons I imagine.
It's not about the issue.
Don't they also get used for cases where (spitballing here) half a town gets cancer because the chemical plant in the area has been illegal dumping their effluents next door?
So no longer can they even claim to be anti government corruption & spending, and pro business & 'freedom.' They just appear to be 'anti people.'
But please don't pretend the Dems are a whole lot better on most of these issues... I really hope our generation can work together and do something about this failing two-party system.
*a short list: domestic surveillance, police militarization, civil forfeiture, anti net netruality, military expansion, pro Wall St, hand outs to healthcare lobbysits, etc..
Correction: anti-poor people.
Correction: anti-middle class people. They can't extract any money from the poor, and clearly not from the rich, so guess who's left?
Paying attention and voting accordingly is a pretty good solution. Unfortunately, almost no one does that (and it tends to be even worse at the local level).
They are, and people can demand they be better still.
The logic is this: "Look, you just need to add this handful of lines to your agreement, and you've instantly got protection against money-grubbing, ambulance-chasing lawyers who would come after you because you misplaced a parenthesis. The cost is nearly zero, because nobody reads those contracts anyway, and anybody who makes a stink about it is probably one of those money-grubbing, sue-happy customers you don't want, anyway."
So, yeah. I get it. I hate it, but I get it. To change it is going to require a consumer backlash large enough to impact congress -- not just the CFPB. But consumers aren't making enough noise, because of course, nobody reads those contracts anyway...
But as an investor in the same company, I would fault them for not taking a simple step to protect their profits. Just because you include the clause doesn't mean that you're going to do evil and exercise it. Again, I can't fault you for taking the get-out-of-jail-free card that's offered. But I fault you mightily for doing something that would require flashing that card.
The fact that the card exists at all seems like the root problem to be fixed.
And I disagree. Including the clause indicates your willingness to be evil in exercising it.
The fact that the card exists is absolutely a problem that exists and needs to be fixed. But you had the option to take it or not, and you chose to take it. That in itself is an evil step.
You can and should. So should I. If consumers refused to sign they wouldn't put them in.
Unfortunately we don't live in a world that allows us to easily do that (unless you want to live without a phone, internet, a car, etc...). So that's why the government needs to step in. It doesn't make these companies any less scummy for using the clause.
So surely you're just as angry about the Democrats deregulating the telecoms in 1996 and allowing companies to own entire vertical chains. (Comcast owns everything from the News, to the pipe you get it from. Ever notice how they never mention "big corporations are killing America" anymore?)
The GOP hates you. The Democrats _pretend_ not to. If that weren't the case, you'd think 8 years under Obama and near-universal public support behind him... things would have actually you know... gotten better.
Too bad they were too busy letting Wall Street destroy the economy without jailtime, giving guns to Mexican cartels, spying on and threatening journalists, drone strikes on US citizens, unprecedented exponential growth in classified documents (cover my ass, anyone?), using the IRS as a political wing, and hunting down and smearing both Snowden and Julian Assange. (Props for the ACA, though. Except that also had no provision to stop healthcare insurance companies rapidly increasing, insane prices that make even ACA plans unaffordable to poor people--I would know. Minimum of $350 a month isn't a viable healthcare plan, as it continues to rise ~10% a year. But fixing pre-existing conditions was About Damn Time(TM), so again, props to them.)
p.s. I voted for Obama, so yeah, I do get to bitch about the disparity between what he said, and what he did.
Things did get better under Obama, in many ways. To pretend otherwise by focusing on areas that didn't get better is again unreasonable. Things are getting dramatically, markedly worse under a president who is essentially pushing standard-issue GOP agenda items. This article alone is evidence of that. Little effort need be expended for more examples.
And, for what it's worth, I'm not a straight-ticket voter.
*Edited for tone.
The 2007-8 crash was somewhat before Obama's time.
> giving guns to Mexican cartels
Started under Bush.
> spying on and threatening journalists
Started decades before Obama.
> unprecendented exponetial growth in classified documents
That needs a citation.
> using the IRS as a political wing
Unless I'm reading https://en.wikipedia.org/wiki/IRS_targeting_controversy wrong, this was a natural (and requested) response to Citizens United and Republicans abusing 501(c)(4) entities.
> hunting down and smearing [...] Julian Assange
It is extremely difficult to smear a neo-nazi misogynist more than he already does by his own words.
Not the jailtime, and not the Obama negotiations with Wall Street. Do you ever watch Frontline... or Google?
>Started under Bush.
Misnomer. It started under bush, and a second, LARGER program started under Obama. Google it.
>Started decades before Obama.
Wrong. Look up the unprecedented demands of Obama for news companies to reveal their anon sources.
>That needs a citation.
God damn, have you ever heard of Google? Or are you just afraid of finding out something?
https://nsarchive.files.wordpress.com/2010/04/classified.png
> neo-nazi misogynist
As usual, use a character attack when you don't have the logic to win.
You can really tell when someone's ego is on the line when they refuse to even check your facts before attempting to refute them with "I haven't seen it, so it must be wrong."
I think Assange is a self-serving hypocrite, but calling him that seems pretty extreme.
Looks like that was a bi-partisan effort, but with more Democrats opposing it than Republicans. Senators who voted for the act: 51 Republicans, 30 Democrats. Senators opposed: 2 Republicans, 16 Democrats (one Republican senator didn't vote).[1]
House members who voted for the act: 236 Republicans, 178 Democrats. House members opposed: 0 Republicans, 15 Democrats (four Democratic house members didn't vote).[2]
[1] https://www.govtrack.us/congress/votes/104-1995/s268 [2] https://www.govtrack.us/congress/votes/104-1996/h25
While I understand this sentiment, you have to understand that it is also necessary to try and inspire people even if you know that you probably won't get everything you want to get done. You can hope that people will act intelligently in their own self-interest and know that you are the best candidate for them, but in reality I don't think that is enough, you have to inspire people and work their emotions. It is manipulative but also, unfortunately, necessary. Given what Obama had on his plate and a totally oppositional congress for the most part, we can't really complain. He tried to be bipartisan and it was a waste of effort for the most part, yeah he could have been better in theory but in reality I'm not so sure.
Lawsuits are very expensive and time-consuming. Few individuals have the resources to sue companies like Equifax. Also, if Equifax defrauds 10 million people of $1,000 each, that's $10 billion in fraud but zero penalty, because $1,000 isn't worth a lawsuit for any individual.
This was a law masquerading as a regulation and it needs to a law passed by Congress and not some out of control government agency who reports to no one. Go read up on this construct, it was an attempt to prevent normal government checks and balances from affecting it. Its chief is not subject to anyone, there are strict rules to prevent their removal, their funding is not from Congress but instead the Federal Reserve. Even the Fed cannot control the spending of this agency which can reach 12% of the Fed's budget; meaning nearly half a billion dollars to an unaccountable agency.
So while the law was good it is the agency affecting it that is the true issue and this agency needs to be put back into an accountable structure like all Federal Agencies. This was a pure partisan attempt to create an agency and staff it in a particular way to prevent debate and review.
(For your other points: "rich" trial lawyers that make, on average, less than software developers? "partisan" isn't the dirty word you think it is, ideas should be judged on merits regardless of source. Funding from the fed reserve is actually fairly brilliant, considering the continual issues with passing a budget in congress.)
What? No. “Unaccountable” means “can’t hold them accountable for their actions”.