Cory Groshek of Green Bay, Wisconsin appears to scour online job offerings to see whether the employers have correctly followed the requirements of the Fair Credit Reporting Act on where and how to disclose that they intend to seek an applicant’s consumer credit reports. “Within a recent 18-month stretch, Groshek applied to 562 jobs, including one at Time Warner Cable. But it doesn’t appear he had any intention of keeping a job long-term. Instead, his aim seems to be to catch companies violating the law during the hiring process, so he can threaten a class-action lawsuit and demand a settlement….So far, Groshek has threatened to sue at least 46 companies that performed a background check on him” and has gotten settlements from about 20. Because Congress made liability for violations more or less automatic whether or not any actual consumers or workers were harmed, judges seldom throw out FCRA class actions, and “several companies across the country have paid out seven-figure settlements” in cases with other plaintiffs. [Milwaukee Journal-Sentinel]
“The U.S. Department of Justice (DOJ) has filed a series of criminal charges against short-term lending companies, accusing the unrelated firms of violating the Racketeer Influenced Corrupt Organization (RICO) Act, a federal law passed with the intention of combating organized crime.” It says lenders have falsely claimed affiliation with American Indian tribal governments so as to evade regulation. [Ben Johnson, Heartland]
The forces of consumer financial regulation led by Sen. Elizabeth Warren have made it clear that they would like to ban “payday” lending (short-term, at high interest rates or fees). Yet history teaches that such lending — like gambling, late-night alcohol, and many other disapproved activities — is in such steady demand that short of government supervision of a population more intense than anything in living memory, the real choice is whether to tolerate an aboveboard legal market or to drive it into informal and sometimes illegal channels. In the latter circumstance, consumer remedies against bad actors may be non-existent, and extra-legal status and the absence of advertising may make it hard for borrowers to compare possible sources of loans. As for enforcement methods following non-payment of debt: “Driving [businesses] underground will very often make it worse,” Olson said. “It will mean outright violence, at worst, or extralegal sanctions for those who aren’t paying their debt. You might find you like extralegal sanctions less than you like things they can currently do, like ruining your credit rating.” More: Eric Boehm.
[Note: updated Friday 9:30 a.m., an hour and a half after publication, after it became clear that the original reporting was gravely flawed] According to KRIV, “the US Marshals Service in Houston is arresting people for not paying their outstanding federal student loans. Paul Aker …says seven deputy US Marshals showed up at his home with guns and took him to federal court where he had to sign a payment plan for the [$1500] 29-year-old school loan. Congressman Gene Green says the federal government is now using private debt collectors to go after those who owe student loans. Green says as a result, those attorneys and debt collectors are getting judgments in federal court and asking judges to use the US Marshals Service to arrest those who have failed to pay their federal student loans.”
But see: Scott Riddle with plenty of evidence that KRIV’s version of the story omits material facts (h/t commenter Matthew: Aker “wasn’t arrested for the debt itself. He was arrested for evading service and failing to show up for mandatory court dates.”) As for the guns, the marshals’ office said it sent reinforcements when an attempt to arrest Aker failed and the situation escalated. As Riddle notes, the original report had spread rapidly around news outlets, but corrections and clarifications are often slow to catch up.
You almost have to admire the industriousness of suspended Orange County, Calif. loan modification lawyer James Mazi Parsa in building up such a big practice of deeply unhappy clients. A hearing judge has recommended disbarment. [Debra Cassens Weiss, ABA Journal]
- Consumer Financial Protection Bureau cracks down on “rent-a-D.A.” scheme in which private debt collector acquired right to use prosecutor’s letterhead [Jeff Gelles, Philadelphia Inquirer, earlier here and here]
- What Santa Ana, Calif. cops did “after destroying –- or so they thought –- all the surveillance cameras inside the cannabis shop.” [Orange County Weekly via Radley Balko]
- Maryland reforms mandatory minimums [Scott Shackford/Reason, Sen. Michael Hough/Washington Times]
- Locking up past sex offenders for pre-crime: “Civil Commitment and Civil Liberties” [Cato Unbound with Galen Baughman, David Prescott, Eric Janus, Amanda Pustilnik; Jason Kuznicki, ed.]
- Two strikes and you’re out, Sen. Warren? Or is there some alternative to DPAs/NPAs (deferred prosecution agreements/non-prosecution agreements?) [Scott Greenfield, Simple Justice]
- Covert cellphone tracking: “Baltimore Police Admit Thousands of Stingray Uses” [Adam Bates, Cato, related on Erie County/Buffalo]
- “Citizens face consequences for breaking the law, but those with the power to administer those laws rarely face any.” [Ken White, Popehat] “61% of IRS Employees Who Cheated On Their Taxes Were Allowed To Keep Their Jobs” [Paul Caron, TaxProf]
Sorry, class action lawyers, but LinkedIn’s “References Searches” function does not constitute a consumer credit reporting agency [ESRCheck]
The Target Corporation’s settlement of class action litigation over a major consumer data security breach is not as groundbreaking as all that, and in particular falls far short of the enormous liability payouts that were being talked of for a while [Paul Karlsgodt; Minnesota Public Radio] It does however feature attorney’s fee payouts “not to exceed $6.75 million, which is on the high end of the historical range” [Paul Bond, Lisa Kim, and Christine Czuprynski, Reed Smith] Earlier here. More: Randy Maniloff, Minneapolis Star-Tribune.
- Missouri law incentivizes local ticket-writing, Illinois not so much. Guess how municipalities respond? [Jesse Walker] “Ferguson’s Court Fine Scandal Arose Because Of Its Bloated Government” [Scott Beyer; earlier on fines and fees in Ferguson here, here, here, here, here, here, here, etc.] “Nassau’s top cop orders retraining of officers who write fewest tickets” [Newsday via @GoLongIsland]
- Maryland House passes forfeiture reform 81-54, with nearly all GOPers voting against the property rights side [my Free State Notes post, Maryland Reporter and more (Baltimore County Del. and former police officer John Cluster “said he hadn’t seen a single case of abuse in his time”), Jason Boisvert]
- “Quiet change expands ATF power to seize property” [Adam Bates, Cato]
- Meanwhile on the civil side, hedge funds place heavy bets on litigation finance [Paul Barrett, Business Week]
- In news that will surprise few libertarians, debt collection on behalf of government agencies is fraught with problems [CNN project overview links to individual stories]
- Among its numerous other problems, pending “human trafficking” bill would establish a fund to cycle fines back to law enforcement and victim advocates [Elizabeth Nolan Brown, Reason]
- Investigation into forfeiture in Indiana [Indianapolis Star]
“An elderly Pennsylvania husband and wife are being asked to pay their deceased adult son’s medical bills under a law making family members responsible for a loved one’s unpaid bills. The case is a reminder that such ‘filial responsibility’ laws may go both ways – requiring parents to pay the debts of adult children as well as the children to pay for their parents’.” 28 states have laws obliging adult children to pay the nursing home and medical bills of their parents or more rarely, as in this story, vice versa. The filial-responsibility laws have not been much enforced, “but lately states and health care providers have started taking a second look at them to recover medical expenses.” [Elder Law Answers; Paul Muschick, Allentown Morning Call]
“With a crackdown on payday lenders, subprime borrowers are increasingly using auto title loans, whose high interest rates can lead to repossession and financial ruin.” [DealBook/NYT] Todd Zywicki at Volokh finds much lacking in the article’s analysis: “it turns out that those who use these products are not as stupid as the Times’s reporters imply they are.” Reihan Salam: “Remember when people said that cracking down on payday loans would have regrettable consequences?”