Consumer Law

Facebook Shares Tumble Amid Cambridge Analytica Scandal

By By Hilarie Bellis, J.D. Candidate 2019 | March 24, 2018 | Posted on

Facebook shares continued to tumble last week, falling more than 13% and closing just under $160 per share on Friday, March 23rd. Facebook is under fire after the revelation that Cambridge Analytica, a voter-profiling company, accessed the private information of more than fifty million Facebook users without their permission. The data was used by Cambridge Analytica to help profile millions of American voters for President Trump’s 2016 presidential campaign.

Facebook had originally downplayed the data leak, but founder and CEO Mark Zuckerberg finally issued a statement on Facebook last Wednesday. Zuckerberg later apologized during an interview on CNN, calling the incident a “major breach of trust.” The scandal has spurned the hashtag #deletefacebook, with Google searches as to how to delete Facebook tripling last week. Sentiment for the movement comes from a variety of places: some users say they did not realize their data was being sold and feel their privacy has been invaded, while others do not like the fact that their profile may have been used to help elect President Trump.

There are already four lawsuits filed against Facebook in Northern California federal courts, three of which are brought by shareholders of the tech giant. The fourth lawsuit is a class action suit alleging that Facebook had “absolute disregard” for the personal data of the fifty million users whose data was taken without permission by Cambridge Analytica.

Despite losing around $75 billion in market capitalization last week, COO Sheryl Sandberg said Facebook does not look at user privacy issues as long-term damage to the company’s stock price and business model. Yet the company’s business model is built on selling its users’ data. Should the company face tighter regulations, it may need to rethink its business model, which is likely why the company is taking small, slow steps to address the scandal.  

Zuckerberg has been called to testify before both the House and Senate. He has said he would be willing to testify, and that he was not sure whether or not Facebook should be better regulated. There is talk for more regulation of social media and technology companies. Apple CEO Tim Cook said he thinks tech companies should be regulated as to how they are allowed to use customer data.

Facebook Shares Tumble Amid Cambridge Analytica Scandal

Tech Companies Challenge Subpoenas and Gag Orders

By Roslyn Akel, J.D. Candidate 2019 | Posted on

Tech companies are increasingly resisting what they believe to be government overreach in an effort to protect the privacy of their consumers’ communications and personal information. Recently, lawyers for these companies have argued that the increase in gag orders accompanying court-ordered subpoenas, as allowed by the Electronic Communications Privacy Act of 1986, is unconstitutional. Specifically, they cite that such practices violate the First and Fourth Amendment rights of their consumers. The ACLU has also indicted this practice as well. It charged that the government is keeping its investigations secret in circumstances where transparency not only is required but would also serve the public good.

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Mandatory Arbitration Clauses Under the Spotlight

By Sean Pinckney, J.D. Candidate 2018 | | Posted on

In recent years, the use of mandatory arbitration clauses by corporations has increased following several Supreme Court decisions. Most credit card, cellular phone, utility, Internet purchase, and employment contracts today require customers and employees to sign lengthy and nebulous agreements that mandate private arbitration for any disputes arising from the contract. Some commenters feel that the privatization of justice leads to pro-corporation outcomes: customers are unable to bargain for different or better terms with the company, and the only way around the mandatory arbitration clause is to not enter the contract. However, with nearly every company in the industry adhering to this practice, avoiding arbitration clauses is all but impossible. Critics claim that the clause denies customers the fundamental right to their day in court, protected by the Seventh Amendment.

Arbitration clauses additionally prevent customers and employees from forming class actions against companies. This raises questions of fairness as it is very difficult for an individual to successfully sue a corporation with vast resources; the lawsuit often costs far more than the relief sought. By precluding the formation of class actions, companies are able to deny challenges to questionable business practices such as predatory lending, wage theft, overdraft fees, and discrimination. The New York Times reports that between 2010 and 2014, companies were able to push 80% of class actions into arbitration, where then the claims would often be dismissed due to the class action waiver in the arbitration clause.

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Volkswagen May Face Civil and Criminal Charges

By Thao Thai, J.D. Candidate 2018 | Posted on

According to the Environmental Protection Agency (EPA), Volkswagen installed “defeat devices,” designed to cheat emissions tests, in 11 million diesel cars worldwide. VW’s “diesel dupe” has already caused the company considerable financial damage, as it has set aside $7.39 billion to cover recall costs in the U.S. alone. In addition, VW may now face civil and criminal charges for violations of the Clean Air Act (CAA) as well as class action lawsuits from private individuals.

Under the CAA, an automaker can be fined up to $37,500 for every noncompliant vehicle. The EPA could impose a total civil fine of more than $18 billion on Volkswagen for its approximately 500,000 noncompliant cars in the U.S, though allegations of violated environmental rules are often settled for much less than the maximum fine.

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Second Circuit Upholds Credit Card Surcharges in New York State

By Taylor Arabian, J.D. Candidate 2016 | Posted on

On September 29, 2015, the U.S. Court of Appeals for the Second Circuit upheld New York General Business Law §518, effectively reviving a ban on retailer-imposed surcharges against credit card users. In a 3-0 decision, the appellate court judges overturned a ruling from the Southern District of New York that described the law as “incomprehensible,” determining that it violated neither the First Amendment nor the Due Process Clause of the Fourteenth Amendment.

Barring an effective appeal to the U.S. Supreme Court, retailers will now be subject to criminal penalties if they attempt to impose surcharges on customers paying with plastic. The maximum penalties include up to one year in prison and a $500 fine for merchants found to be in violation of the law.

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Volkswagen Braces for “Dieselgate” Fallout

By Madisson Goorman, J.D. Candidate 2018 | Posted on

On September 19, 2015 the Environmental Protection Agency (EPA) called for a recall of almost 500,000 Volkswagen (VW) diesel powered cars, after finding these cars contain software that manipulates results for standard emissions tests. In its report, the EPA states that this software “allowed Volkswagen vehicles to spew as much as 40 times the pollution allowed under the Clean Air Act.”  On Tuesday, VW disclosed that 11 million cars have this software, suggesting that there is a possibility for a global recall.

Since this announcement there have already been 16 class actions filed against VW in the United States. These suits “include claims for breach of warranty and fraud by concealment as well as various state consumer protection laws.”

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Update: Comcast and Time Warner Cable Merger

By Roxana Guidero, J.D. Candidate 2016 | Posted on

Two months ago, we reported on the Comcast and Time Warner Cable merger.  At the time, Comcast had expressed confidence in the approval of the merger.  However, recent events have commentators speculating whether approval will be as easy as Comcast believed.  The infamous Comcast customer service call that has been making the rounds online has come at a very inconvenient time for Comcast, who is in the middle of the merger approval process.

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Consumers v. Big Business Part III: Sprint and T-Mobile

By Roxana Guidero, J.D. Candidate 2016 | Posted on

Sprint and T-Mobile, the nation’s third- and fourth-largest wireless phone operators, are now fully engaged in merger talks.  Following the AT&T/DirecTV and Comcast/TWC merger, this is set-up to be the third largest telecommunications deal in the past three years, and perhaps the last big deal of its kind for the near future.  The planned merger would be the 18th largest deal in the telecommunications industry since 1984. (more…)

Consumers v. Big Business Part II: Comcast and Time Warner Cable

By Roxana Guidero, J.D. Candidate 2016 | Posted on

In the telecommunication consolidation arena, Comcast’s offer to buy Time Warner Cable (“TWC”), leads the charge for mega-mergers. As with the recently announced AT&T and DirecTV merger, consumers fear the effects of such a merger on the quality and cost of TV and Internet services, while pro-business groups view the merger as a win for business. As Comcast-TWC awaits regulatory approval, consumer advocacy groups are trying to stop the merger while many speculate about the effects the merger will have on the telecommunications market.

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Consumers v. Big Business Part I: AT&T and DirecTV

By Roxana Guidero, J.D. Candidate 2016 | Posted on

In what appears to be the year of telecommunication consolidations, AT&T has just joined the race to becoming the country’s largest Internet and TV provider by announcing a bid for DirecTV. Such a merger—marrying the largest U.S. wireless company and the largest U.S. satellite television provider—would propel AT&T to the No. 2 spot in the telecommunications arena, behind a combined Comcast and Time Warner Cable (“TWC”), for which a merger is still pending. This deal, if approved, has been commended by some as a win for business in the United States, while condemned by others as a loss for consumers.

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