Consumer Law & Policy Blog

How High Can Tuition Go?

by Jeff Sovern

Each year, colleges and universities hike tuition, typically by more than the rate of inflation.  Competition among schools undoubtedly constrains the hikes to some extent, but are there any other limits?  An economist might say that it makes sense to pay tuition as long as the tuition is less than the present value of the expected lifetime benefits of the education, minus the opportunity costs.  Put another way, if the amount you receive in the form of increased salary over your lifetime after going to college is higher than the amount you would earn without a degree, which is what has consistently been reported, it makes sense to pay tuition as long as the tuition is less than the present value of that increase. That formulation overlooks the nonpecuniary benefits of education, which are substantial, but if you could quantify those benefits, you would add them to the expected benefits as well.  In any event, it suggests that when the costs of education exceed the benefits, people should stop paying tuition.

That should work the same way for law schools as well, except that we’re comparing incomes as lawyers with incomes as non-lawyers for college grads.  We’ve already seen some signs that law school tuition has risen high enough to price some people who formerly went to law schools out of the market.  In my early years as a law teacher, our school had a substantial number of students who saw becoming a lawyer as a second long-term career; many were retiring after twenty years or so as teachers or police officers, for example.  Most of them were enrolled in our part time night program, but some went full-time during the day.  The number of such students has dropped dramatically with a correspondingly dramatic shift in the character of the night program.  I can’t be certain, but I suspect that a contributing factor is that they can no longer expect to earn enough in the years between beginning their second career and retirement to justify spending money on the much higher tuitions we and other law schools charge.  I haven’t researched the matter, but friends at other law schools with night programs have told me that their programs too have many fewer students who see law school as a doorway to such a second long term career.  Those students used to enrich our classes by bringing in relevant experiences, and we’ve lost that (though in return we’ve gained greater financial resources to do other things), plus society has lost whatever benefits accrue from having lawyers with substantial experience in other careers.

May 2008 Safety Recalls

Check out the May 2008 safety recalls for vehicles from the National Highway Traffic Safety Administration and for other consumer products from the Consumer Product Safety Commission.

Elizabeth Warren on Business Week's NAF expose

Over the weekend, Brian posted about Business Week's new must-read investigative report on how the National Arbitration Forum stacks the deck against consumers.  Elizabeth Warren has just posted her thoughts on the article over at Talking Points Memo:

Whether you know it or not, you may have already lost your next dispute with your credit card company--even if they made the mistake and you can prove it.  . . .  The Business Week story is for everyone who thinks that, by and large, fairness will win out, for everyone who thinks that a big-name company would never deliberately take advantage of its customers, and for everyone who things that arbitration sounds like a low-cost, fair way to clear up problems.

(For more background on the subject, check out Public Citizen's statistical analysis of NAF cases.) 

ACORN Names State Attorneys Generals Doing the Most to Battle the Foreclosure Crisis

by Brian Wolfman

The grassroots organization ACORN has just released a report that I think our readers will find interesting. The report looks at the reaction of the attorneys general of the 50 states and D.C. to the current foreclosure crisis and honors six "A+" recipients: Lisa Madigan of Illinois, Lori Swanson of Minnesota, Tom Miller of Iowa, Andrew Cuomo of New York, Martha Coakley of Massachusetts, and Richard Blumenthal of Connecticut. It discusses the best practices of the AGs in the areas of legal strategy, constituent services, public advocacy, and data collection. Read the full report and ACORN's press release. And, while you're at it, listen to a press call with three of the A+ attorneys general: Madison, Swanson, and Blumenthal.

ACORN's effort was spurred by its belief that the AGs' efforts to deal with foreclosures have been under-reported, and that although a number of AGs are doing great work, too many are still sitting on the sidelines and haven't yet tuned in to the crisis. ACORN hopes that the A+ AGs will serve as role models for the others.

The Philadelphia Plan

Philadelphia's county court has combined a 3-month moratorium on selected foreclosures with an intensive counseling and mediation program, in order to prevent unnecessary foreclosure sales. Owner-occupants with pending sheriff's sales must first go to free counseling. If that does not produce a workout, the homeowner is assigned an advocate and attends a court-supervised mediation with the mortgage servicer's attorney. The Residential Mortgage Foreclosure Diversion Pilot could serve as a model for other courts clogged with foreclosure cases. Details in the Inquirer story.

Correction to Post That President Signed FACTA Truncation Bill

A commenter named Ted correctly pointed out that my post yesterday was inaccurate.  Here is the addition to § 1681n, the section authorizing private suits for willful violations of the FCRA, that Congress added in H.R. 4008, now known as the Credit and Debit Card Receipt Clarification Act:

d) Clarification of Willful Noncompliance- For the purposes of this section, any person who printed an expiration date on any receipt provided to a consumer cardholder at a point of sale or transaction between December 4, 2004, and the date of the enactment of this subsection but otherwise complied with the requirements of section 605(g) for such receipt shall not be in willful noncompliance with section 605(g) by reason of printing such expiration date on the receipt.'.

The amendment does not affect suits in which sellers printed the entire credit card number on a receipt, nor will it affect suits in which consumers have suffered actual damages because a seller printed an expiration date on the receipt (which might happen, for example, if the date was printed on the receipt and someone used the receipt to make an unauthorized credit card purchase and the consumer was damaged thereby), in violation of § 1681c(g) of the FCRA.  It will, however, prevent consumers who have not been injured by the inclusion of the expiration date from obtaining statutory damages under § 1681n if the receipt also printed no more than the last five digits of the credit card number. I apologize for my sloppiness and thank Ted for pointing out the error.

Supreme Court Patent Decision Should Give Some Comfort to Consumers

by Greg Beck

Cross-posted from Citizen Vox

The Supreme Court yesterday issued an important decision involving patents that, although technical in nature, may end up becoming an important victory for consumers. In recent years, companies have increasingly attempted to use their patents on products to limit what people can do with those products after buying them. For example, companies attach "not for resale" labels on products, a practice that allows them to keep prices high by limiting competition from low-priced used goods. The same practice is used by copyright owners to limit the resale of software and music. In Vernor v. Autodesk, Public Citizen recently won an important victory against a software company that attempted to impose just such a limitation on the resale of software. In another case, the Electronic Frontier Foundation is challenging the recording industry's attempt to prohibit resale of promotional CDs by labeling them "promotional use only."

The Supreme Court's decision yesterday in Quanta v. LG Electronics should give some reassurance to consumers who purchase products that come with limited terms of use. The case involved the doctrine of "patent exhaustion," a legal rule providing that patent owners, once they have sold a patented product, have no further right to control what the purchaser does with it. LG had licensed its patented computer chip technology to Intel. The license agreement granted Intel the right to use the chips in its own products, but also provided that anyone who subsequently purchased the chips from Intel did not have the same right. When, in spite of the agreement, Intel sold the chips to Quanta, LG sued, arguing that Quanta had no license to use the patented technology.

The Supreme Court disagreed, holding that once LG had sold the chips to Intel, it had exhausted its rights in the chips and could no longer control what Intel did with them. Although the Court's decision did not rule out the possibility that different sorts of license agreements might be upheld in other cases, the outcome is a step in the right direction. The decision reinforces the principle that patent owners cannot use their rights to interfere with competition and limit what people can do with the things they own.

Should Arbitrators Have to be Licensed?

Jeffrey W. Stempel argues that sometimes they should be in  "Keeping Arbitrations from Becoming Kangaroo Courts," 8 Nevada L. Rev. 251 (2007).  Here's the abstract:

Arbitration has grown rapidly during the past 20 years. Particularly notable and problematic is the rapid onset of new or mass arbitration that has resulted from the judiciary's modern favorable attitude toward enforcement of arbitration clauses, even those imposed upon consumers, employees, small vendors, and debtors as part of a standardized contract of adhesion. In a separate article (See "Mandating Minimum Quality in Mass Arbitration," 76 U. Cin. L. Rev. (forthcoming 2007)), I present a more comprehensive list of what I regard as the necessary steps that must be taken to insure minimally acceptable quality and fairness in mass arbitration. In this article, I focus more specifically on the questions of impartiality, adherence to substantive law, and judicial review, although these concerns are of course also dimensions of any reasonably broad inquiry into quality.

The explosion of mass arbitration during the late 20th Century has created too much potential that arbitration could become an unfair forum for dispute resolution. Of particular concern is the impartiality and competence of the arbitrator, consistency with substantive law, and quality control through appellate review. This article advances three operational proposals for achieving rough equivalency between arbitration and litigation: (1) a licensing system for arbitrators in mass arbitrations; (2) a default rule that arbitration follow substantive law and reach results consistent with substantive law; and (3) replacement of the current deferential standard of review for arbitration awards with appellate review similar to that accorded trial court decisions. However, parties in traditional commercial arbitration should be permitted to contract around the requirement of licensed arbitrators bound to follow substantive law and should also be permitted to stipulate to restricted judicial review.

Chicago Court System a "Frenetic Debt Collections Machine"

The Chicago Tribune has this interesting article on the state of debt collections in Chicago, noting that Cook County courts are clogged with more than 119,000 civil lawsuits against alleged debtors. Many of these cases involve mistaken identities or debts that have already been paid.

AP Poll on Relationship Between Crushing Debt, Stress, and Poor Health

This blog has covered issues relating to consumer debt intensely. But we have often ignored the personal toll unmanageable debt imposes on people's lives. This long story in today's Washington Post discusses an AP-AOL poll of consumers regarding the relationship between debt and consumer health.  Here's a preview: "When people are dealing with mountains of debt, they're much more likely to report health problems, . . ., according to an Associated Press-AOL Health poll. And not just little stuff; this means ulcers, severe depression, even heart attacks."