FindLaw's Common Law

Struggling with Student Loans? New Federal Rules May Help

2009-07-02T08:57:12-07:00

If your student loan balances make you feel like a member of the Class of Forever, help may be here. It's not exactly a bailout, but a number of federal student loan rule changes that went into effect this week are aimed at lightening the repayment load for overburdened borrowers.

Lower Interest Rates. As of this week, people with older student loans will catch a bit of a break. For federal loans issued before July 1, 2006, the interest rate will be reduced to 2.48 percent, down from the current 4.21 percent rate. And the interest rate on new subsidized federal Stafford loans will fall to 5.6 percent (down from 6 percent), as the Chicago Sun-Times reports.

Relaxed Loan Forgiveness for Public Service Jobs. If your job relates to public service -- if you work for the government, teach in public schools, or are employed by a qualifying non-profit, for example -- you may be able to have your entire student loan obligation forgiven (erased) after 10 years. This is down from the previous 25-year forgiveness standard, according to Reuters.

Income-Based Repayment. A new income-based federal student loan repayment option also went into effect this week. It lets borrowers set up a monthly student loan repayment that is as low as 15 percent of their adjusted gross income for the year. As CNN points out, while the income-based option can make payments significantly lower, the loans themselves could take longer to repay, meaning more interest is paid. But the trade-off may be worth it for some borrowers.

Many of the new federal student loan rules going into effect this week are part of the College Cost Reduction and Access Act, which was signed into law in 2007. On top of the features outlined above, the Act extended federal Pell and TEACH Grant funding, and increased income protection allowances for many students.

Chicago Sun-Times: Low Loan Rates Give College Students a Break
Reuters: Can Your Student Loan Get a Bailout?
CNN.com: Rules to Ease Student Loan Repayments Take Effect
College Cost Reduction and Access Act (GPO.gov)
Debt Relief Options (FindLaw)
Are Student Loans Discharged in a Bankruptcy Proceeding? (provided by Robert I Cohen, P.C.)
What are the Alternatives to Filing for Bankruptcy? (provided by Wizmur & Finberg, LLP)

Michael Jackson Dead: R.I.P. King of Pop

2009-06-25T17:11:44-07:00

Michael Jackson, the King of Pop, passed away today in Los Angeles. He was 50 years old. He leaves behind three children, a legacy of pop music classics, as well as a level of fame and controversy reserved for very few.

As reported by the AP, Jackson died this afternoon in a Los Angeles hospital. Reuters reports that he suffered a cardiac arrest. The exact cause of death has not yet been reported.

A star since his childhood, Jackson's later years were marred by molestation accusations, his heavily covered trial in Santa Maria, California, and repeatedly delayed attempts at a come-back.

His classic album Thriller remains the highest selling album worldwide of all time, with more than 100 million copies sold.

FACTBOX: Key facts about Michael Jackson (Reuters)
Thriller Video (Spike.com)
Jackson Five (Motown.com)
FindLaw Coverage of the Michael Jackson Cases

FTC Announces Key Consumer Fraud Enforcement Actions

2009-06-19T14:21:58-07:00

The Federal Trade Commission announced two key consumer protection enforcement actions this week: a $1.7 million court judgment against a payment processor that was making unauthorized debits from consumer bank accounts, and the mailing of over $12 million in checks to consumers who had been victimized by unauthorized credit and debit card charges for Internet services.

$1.7M Judgment for Unauthorized "Discount Pharmacy Card" Bank Account Debits. At the FTC's behest, a federal court this week ordered a payment processor -- charged with making unauthorized debits from consumers’ bank accounts -- to pay $1.7M in consumer compensation and to put a stop to the illegal practice.

According to the FTC, in 2006 the agency charged InterBill Ltd. -- which served as a middleman between merchants and banks or credit card companies -- "with unfairly debiting thousands of consumer accounts for a merchant’s nonexistent 'discount pharmacy cards," despite indications that the pharmacy card operation was bogus."

J.K. Publications Credit Card Fraud: $12M in Checks Mailed to Consumers. In the second consumer protection enforcement move announced this week, as a belated result of a successful 1999 lawsuit, the FTC mailed over 400,000 checks worth more than $12 million to consumers who were victimized by an illegal credit card billing scam operated by a company called J.K. Publications.

The delay in time between the lawsuit and the disbursement of the checks was due to the defendants' elusiveness, according to the FTC: "Substantial time passed between the court’s judgment and the issuance of these checks because the defendants moved millions of dollars of their ill-gotten funds offshore, and it took significant time and effort to locate and repatriate the fraudulently obtained money (More information about the J.K. Publications case, from FTC.gov).

FTC Obtains $1.7 Million Judgment Against Payment Processor That Took Millions From Consumers’ Bank Accounts (FTC.gov)
FTC Issues Redress Checks to Victims of the J.K. Publications Credit Card Fraud (FTC.gov)
Be Careful What You Click For! (provided by The Law Offices of Vincent W. Davis & Associates)
Keeping Bank Fees Down (FindLaw)
Debtor/Creditor Information Center (provided by Stepniak & Park, P.A.)

New Consumer Protection Agency Could Emerge from Financial Reform

2009-06-15T13:00:37-07:00

A new federal agency dedicated to consumers' financial protection -- regulating everything from credit cards to home mortgages -- could be a key part of the Obama Administration's financial reform plans. Details of the administration's financial regulation proposal should be released later this week.

In a Washington Post Op-Ed piece excerpted on WhiteHouse.gov today, Treasury Secretary Timothy Geithner and NEC Chair Larry Summers laid out the Obama administration's intentions when it comes to financial reforms and enhanced safeguards for consumers:

"Our current regulatory regime does not offer adequate protections to consumers and investors. Weak consumer protections against subprime mortgage lending bear significant responsibility for the financial crisis. The crisis, in turn, revealed the inadequacy of consumer protections across a wide range of financial products -- from credit cards to annuities. Building on the recent measures taken to fight predatory lending and unfair practices in the credit card industry, the administration will offer a stronger framework for consumer and investor protection across the board."

Federal lawmakers are also backing the idea of a new independent consumer protection agency. Last week, Senator Christopher Dodd (D-Conn.) released a statement voicing his support for the agency:

“If the financial crisis has proven one thing, it is that protecting the financial well-being of American consumers should be our first priority as we work to bring our financial regulatory structure into the 21st Century. I am committed to making this agency the centerpiece of my efforts as I work with President Obama and my colleagues to rebuild our financial architecture from the bottom up.”

The Wall Street Journal points out that (not surprisingly) banking groups oppose the idea, and even those who are in favor of the new agency have some kinks to work out: "Proponents have not settled on what form the new agency would take or which financial products it would oversee - issues that could set off turf battles with existing regulators."

Financial Reform, Another Brick in the New Foundation (WhiteHouse.gov)
Dodd Outlines Plan for Independent Consumer Protection Agency (Dodd.Senate.Gov)
Wall Street Journal: Fight Brews Over Proposed Consumer Protection Agency
Washington Post: Consumer Watchdog Gains Key Supporter
Bankruptcy and Debt FAQ (provided by Loop Bankruptcy)
Your Debt Relief Options (FindLaw)
Alternatives to Bankruptcy (provided by Joseph C. McDaniel, P.C.)

Are Reverse Mortgages the New Subprime Loans?

2009-06-09T13:01:35-07:00

When it comes to consumer risk, reverse mortgages present many of the same problems that subprime home loans did, and regulators need to take steps now -- by applying some of the lessons learned in the wake of the subprime crisis -- to avoid a similar meltdown, a federal bank official said this week.

What is a Reverse Mortgage? In a standard mortgage, payments are made to a lender each month. But a typical "reverse" mortgage provides a source of income for a homeowner, because for as long as they live in the home, the homeowner will receive money (i.e. monthly payments) from the lender. The money usually doesn't have to be repaid until the "borrower" dies, sells the home, or moves.

Why the Warning? The warning, which came Monday from Comptroller of the Currency John C. Dugan, was prompted by the risks that come along with the immediate (and often large) lump-sum payments of most reverse mortgages.

In a News Release, Comptroller Dugan warns that "lenders may simultaneously and aggressively market investment, insurance, or annuity products or, worse, attempt to condition loan approval on the purchase of such products." And Dugan points out that "elderly borrowers can be particularly vulnerable to coercive sales of annuity and long term care insurance products that are expensive and may not be appropriate to their needs."

Dugan also expressed concern about other risks tied to reverse mortgages, including substantial hidden fees that can be attached to the loan, and misleading marketing claims, "especially if the product’s incentives and fees put more of a premium on making the loan than on ensuring it is appropriate for the borrower."

Reverse Mortgages: Do Your Homework. If you're in the market for a reverse mortgage, watch out for anyone trying to tie its sale to anything, such as an annuity or insurance. As the FTC advises, "If you don't fully understand what they're selling, or you're not sure you need what they're selling, be even more skeptical. Keep in mind that your total cost would be the cost of what they're selling plus the cost of the reverse mortgage." Learn more: Reverse Mortgages: Get the Facts Before Cashing In on Your Home's Equity.

Comptroller Dugan Urges More Consumer Protections for Reverse Mortgages (OCC.Treas.gov)
Wall Street Journal: OCC's Dugan: Reverse Mortgages Could Pose Risks
Getting a Good Deal on a Reverse Mortgage Loan (FindLaw)
Real Estate Law - Overview (provided by Law Offices of H. Michael Soroy)
Home Equity Loans and Reverse Mortgages (FindLaw)
Deeds and the Law (provided by Polizzotto & Polizzotto, LLC)
FTC: Reverse Mortgages: Get the Facts Before Cashing In on Your Home's Equity

Lemon Laws: Chrysler Car Owners Still Covered After Company's Bankruptcy

2009-06-04T08:56:54-07:00

Chrysler car owners will still enjoy legal protections from serious vehicle defects - rights that are guaranteed under their states' "lemon laws" - even after the car giant re-emerges from bankruptcy under new ownership. That's the not-so-sour result of an agreement reached this week between the new Chrysler LLC and state attorneys general.

Chrysler vehicle owners and consumer rights groups had questioned whether the new owners of Chrysler would "honor Lemon Law rights for vehicles sold or leased by Chrysler prior to the sale of the company," according to a News Release from Florida Attorney General Bill McCollum, but after negotiations with a number of state attorneys general, the new group (led by Fiat Group SpA) "agreed to honor the Lemon Law rights consumers had under Chrysler before the buyout."

What are Lemon Laws? In every state, "lemon laws" give car owners legal rights to free repairs if their new (and newer) vehicles have serious defects -- like mechanical problems -- that are typically covered under a new car warranty. Depending on the severity of the car's problems and the number of repair attempts made, car owners may be legally entitled to a new replacement vehicle under their state's lemon laws. Learn more: State-by-State Lemon Law Information.

Lemon law rights of Chrysler owners are just one of the legal issues raised by the car company's Chapter 11 bankruptcy filing in April, and its planned re-emergence under new ownership. Last month FindLaw's Injured blog reported on the shaky status of some personal injury lawsuits filed by Chrysler owners.

News Release on Chrysler Owners' Lemon Law Rights (Florida Attorney General)
AP: Chrysler Drivers Still Covered by State Lemon Laws
Your Rights If Your Car is a Lemon (FindLaw)
State-by-State Lemon Law Information (FindLaw)
Products Liability FAQ (provided by Law Offices of Jeffrey I. Amtman)
Chrysler Bankruptcy: What Happens to Car Owners' Lawsuits (FindLaw's Injured)
Bankruptcy FAQ (provided by Greenway Law LLC)

FDA Plans Greater Public Transparency

2009-06-03T10:22:48-07:00

Food and Drug Safety Goes See-Through?

This week, the U.S. Food and Drug Administration (FDA) announced the formation of a new task force that will examine the agency's policies and practices when it comes to making information public. The task force will make recommendations on how the FDA can improve the transparency of its operations and decision-making processes.

What sorts of changes can consumers expect through the FDA's new looking glass? Here's a look at some highlights of the FDA Transparency Task Force's plan:

Identify what agency information and actions should be opened up to the public, and what needs to remain confidential.
Explore ways the agency can better explain its operations to the public, including specific enforcement actions and and product approvals.
Eliminate the barriers (internal and external) to providing useful and understandable FDA decision-making information to the public.
Improve current FDA policies to better provide timely information to the public, including the identification of new tools and technological avenues that can be utilized to provide updates on FDA actions, both pending and in progress.
Recommend legislative or regulatory actions that can improve the FDA’s ability to provide information to the public.

On the heels of the announcement of the new FDA Transparency Task Force, the FDA also scheduled a June 24 public meeting to hear recommendations on how the agency can better provide "useful and understandable information on its activities and decisions," according to the FDA News Release.

The Wall Street Journal reports that the new task force will seek to combat the FDA's reputation as a "black box that makes important decisions without explaining them," as FDA Commissioner Margaret Hamburg put it." Topics likely to be on the table include clinical-trial data and details on decisions about recalls and drug approvals," according to the WSJ.

News Release: FDA Forms Transparency Task Force (FDA.gov)
FDA Transparency Task Force (FDA.gov)
Wall Street Journal Health Blog: FDA Tries to Decide What Should, Shouldn't Be Kept Secret
N.Y. Times Editorial: FDA's Secret Files
Legal Questions and Answers (provided by Law Offices of Jack Bloxham)
Products and Legal Issues (provided by Bernard & Stuczynski)

California AG: Foreclosure Consultants Must Post $100K Bond, Register

2009-06-02T10:10:16-07:00

Californians will get enhanced protection from foreclosure rescue scammers under a new plan from state Attorney General Jerry Brown, which will require foreclosure consultation companies to register with the AG's office and post a $100,000 bond by July 1st if they want to stay in business.

The plan will create a registry of foreclosure consultants operating in the state, which will allow consumers to research companies before they seek their services, and will also open up a paper trail for recourse if the company violates the law. All foreclosure consultants operating in the state must post a $100,000 bond with Brown's office by July 1, and provide company information -- including copies of contracts that will be offered to consumers, and examples of advertising. In exchange, the foreclosure consultants will receive a Certificate of Registration, according to the California AG's office.

Foreclosure "rescuers" who try to stay in business without fulfilling the new registration requirements will face criminal penalties, including up to a year in jail, and fines from $1,000 to $25,000 for each violation.

This week's action from California's top cop is the latest government enforcement move meant to protect cash-strapped homeowners from scammers looking to capitalize on the housing market crisis. In April, the federal government announced a nationwide crackdown on the skyrocketing amount of predatory companies making "Foreclosure Relief Now!" and "Save Your Home!" promises they can't (or won't) keep.

Homeowners who may be in danger of foreclosure should thoroughly research their assistance options and watch out for companies that offer to pay off or take over a mortgage, and demand high fees to reduce mortgage obligations down to incredibly (read: impossibly) low monthly payments. Learn more about Foreclosure Assistance Provided by HUD.gov and how to Watch out for Foreclosure Scams.

Brown Directs Foreclosure Consultants to Register with his Office and Post $100,000 Bond (ag.ca.gov)
L.A. Times: California Attorney General Seeks to Deter Foreclosure Scams
Avoid Foreclosure: Help for Struggling Homeowners (FindLaw)
Foreclosure: State-Specific Help and Resources (FindLaw)
Bankruptcy and Foreclosure in California (provided by Jackie Robert Geller)

Samsung "Jitterbug" Cell Phones Recalled Over 911 Flaw

2009-05-28T09:04:43-07:00

Samsung is recalling about 160,000 of its cell phones because of a software flaw that may leave the devices unable to connect with 911 emergency operators in certain no-service areas.

The affected cell phones are Samsung's “Jitterbug” version, model numbers SPH-a110 and SPH-a120, sold at stores and online from March 2008 through May 2009, according to a News Release from the U.S. Consumer Product Safety Commission (CPSC). The problem is that when the phones are in a no-service area, they may display a message that reads “out of range, try again later,” even when callers are trying to connect to 911 in an emergency.

The Samsung "Jitterbug" cell phones, which feature larger keys and a simplistic number of functions, "are aimed at seniors and others who want a device without too many bells and whistles," according to the Wall Street Journal.

Samsung Telecommunications of America and San Diego-based Jitterbug are working to contact phone owners to schedule a free software upgrade. But CPSC is advising people who own the affected phones to call Samsung if they haven't already been contacted regarding the recall.

See the CPSC News Release on the Samsung Jitterbug recall for detailed product descriptions and company contact information.

CPSC Announcement of the Samsung "Jitterbug" Phone Recall (CPSC.gov)
Wall Street Journal: Samsung Issues Jitterbug Recall
Consumer Action Handbook: Cell Phones (FindLaw)
Defective Products and the Law (FindLaw)
Personal Injuries Caused by Defective Products (provided by Kolker & Germeroth, LLC)

Seller Beware: Stricter Product Resale Rules Apply on eBay, Sidewalk

2009-05-27T11:02:45-07:00

That 'As-Is' Tag Won't Necessarily Cut It, Legally Speaking

From televisions to children's toys, if you purchase a new consumer product from a retailer, you're likely aware of the legal remedies available to you if the product turns out to be defective. But you may not know that some degree of legal responsibility also falls on you as a reseller if you turn around and sell those products, in online auctions or even in garage sales.

That's because new federal laws on the sale of used products apply not only to owners of thrift stores and consignment shops, but also to people who sell items privately. How far do a reseller's legal responsibilities go under the new and stricter federal regulations on the sale of consumer products, and what kinds of products carry special rules? Before you hold that sidewalk sale after your spring cleaning -- or if you're a frequent buyer of used consumer products -- keep the following tips in mind.

Resale of Recalled Products. Under the Consumer Product Safety Improvement Act of 2008, ANY selling of recalled products is now unlawful. That means, if you sell a defective product that has been recalled by the manufacturer or federal safety officials, you may be held legally responsible for any injury it causes. So, it's a good idea to pay attention to recent Consumer Product Recalls, from the CPSC.

Lead and Phthalates. New and stricter restrictions are placed on the resale of products that contain lead and certain types of phthalates, especially in certain toys and child care products, under the new federal product safety laws. Learn more: CPSC Spells Out Enforcement Policy for New Lead Limits in Children's Products.

Do I Need to Test Products I Sell? If you sell consumer products in online auctions and garage sales (and are not considered a manufacturer under the new product laws), you aren't required to test the products you sell for lead and phthalates, but you cannot knowingly sell children’s products that violate federal standards on the safe levels of these harmful materials. Learn more: Guidance on the Consumer Product Safety Improvement Act.

CPSC Handbook for Resale Stores and Product Resellers (CPSC.gov)
Consumer Product Safety Improvement Act of 2008: Guidance | About the Act (CPSC.gov)
CPSC Spells Out Enforcement Policy for New Lead Limits in Children's Products (CPSC.gov)
Defective Products: Legal Issues (FindLaw)
Injuries from Defective Products (provided by Stulce & Yantis, Attorneys at Law)