Consumer Law & Policy Blog

President Obama Says He Really Really Likes Elizabeth Warren, But Declines To Make Her Nomination To Head CFPB Official

President Obama just said this:

The idea for this agency was Elizabeth Warren's. She's a dear friend of mine. She's somebody I've known since I was in law school. And I have been in conversations with her. She is a tremendous advocate for this idea. This is a big task standing up this entire agency. So I'll have an announcement soon about how we're going to move forward.

I have had conversations with Elizabeth over these last couple of months. But I'm not going to make an official announcement until it's ready.

Read more here.

Tennessee Conference on Behavior and Business Law to Include Session on Consumer Credit and Behavioral Economics

More information here.  The consumer credit panel features a paper by Edward Janger of Brooklyn and discussants Thomas Plank of Tennessee and William Fox of The University of Tennessee Center for Business and Economic Research

Elizabeth Warren Interviews With The President

Read about it here.

Fatalities on US Roads Hit 60-Year Low

I remember when the number of traffic deaths on U.S. roads regularly exceeded 50,000. In 1970, for instance, traffic deaths were 52,627.

Because of safety improvements in cars and public education, both spurred by changes in law and regulation, the landscape has changed. According to today's Washington Post, "[d]eaths on America's highways have plunged to their lowest level in 60 years, as smarter designs make streets and vehicles safer and aggressive campaigns are waged against drunk and distracted drivers.The number of people killed dropped to 33,808 in 2009, a total 3,615 below the previous year. It was the lowest total since 1950 and marked the fourth consecutive year highway fatalities have declined since 2005, when 39,252 people died. Motorcycle deaths were down by 16 percent, the first decline in 11 years."

It's important to note that these numbers represent an absolute decline in the number of deaths, while the number of miles driven has increased over the decades.

Go here for the National Highway Traffic Safety Administration's press release, which announces the new numbers and explains that more improvement is needed. Go here to view the data.

Zahr Said Stauffer Paper on Embedded Advertising

Zahr Said Stauffer of Virginia has written Embedded Advertising and the Venture Consumer, North Carolina Law Review (forthcoming).  Here's the abstract:

Embedded advertising - marketing that promotes brands from within entertainment content - is a thriving, rapidly changing practice. Analysts estimate that embedded advertising expenditures could exceed $10 billion in 2010. The market continues to grow even as traditional advertising revenues contract. The relatively few legal scholars who have studied embedded advertising believe that it is under-regulated. Ineffective regulation, they claim, is deeply troubling because corporations may with legal impunity deceptively pitch products to trusting viewers. Critics charge that embedded advertising creates “hyper-commercialism,” distorts consumers’ tastes, taints the artistic process, and erodes faith in public discourse. This Article argues that the critics are wrong. Sponsorship disclosure law under the Communications Act of 1934 and related regulations is indeed largely ineffective, in part because the media industry has consolidated considerably and in part because media content is now created and consumed in diverse ways unimaginable to the drafters. The law was conceived for yesterday’s marketplace, but also for yesterday’s consumer. The media consumer today is what this Article calls a “venture consumer.” Often, she knows what she wants, knows where to get it, and is aware of the risks and costs involved. The mismatch between the consumer imagined by regulators and the contemporary consumer means that expanded regulation of embedded advertising according to current reform proposals could end up harming consumers more than helping them. Moreover, embedded advertising is not especially amenable to effective regulation, given the incentives for artists and advertisers to collaborate in the production of entertainment content. In light of the difficulty of correcting the regime’s flaws and the consumer interests threatened by expanded regulation, the Article concludes that the consumer is better served if the law is maintained as-is rather than expanded through the proposed reforms.

Is Google Immune from the Texas Attorney General's antitrust investigation?

by Paul Alan Levy

Last Friday, Danny Sullivan broke the story that the Attorney General of Texas is investigating whether Google violated the antitrust laws by deliberately depressing the search rankings of certain commercial web sites whose services seek to compete with Google.   Since then, several bloggers have reacted with outrage or alarm.   Despite my respect for several of these voices, I am less than impressed by some of the legal arguments advanced by Eric Goldman on his Technology and Marketing Law Blog, and seconded elsewhere, suggesting that Google might be immune from liability even if, in fact, the evidence adduced in the investigation suggested that Google deliberately reduces the search rankings of some competitors.

For example, Eric Goldman argues that Section 230 of the Communications Decency Act  would protect Google against antitrust liability.   Eric is the leading commentator on Section 230 and I hesitate to say he is wrong, but he devotes his discussion to the filtering provision, section 230(c)(2), which seems inapplicable for several reasons.   First, the provision only relates to actions “voluntarily taken in good faith to restrict access to or availability of material” that the filterer “considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.”  It is not at all clear to me that Google can argue that these alternate commercial sites meet that standard; nor would Google, I suspect, argue that it is deliberately “restricting access” to the materials.  Moreover, this provision protects only “good faith” filtering decisions.  Suppose that Google deliberately jiggered its search algorithm to harm competitive web sites; or suppose that it labeled certain web sites so that, after application of the normal algorithm, search ranking for those sites was automatically moved down 20 places (that is, the highest they could appear would be on the third page of rankings).   Google would have a hard time arguing that such filtering decisions were taken in good faith.  Eric Goldman does not invoke the more familiar aspects of section 230, and for good reason:  in the language of the section 230 cases, on such facts Google would itself be responsible for what is illegal about the algorithm or its application.  Google would be the information content provider.  Thus it could not claim protection under sections 230(c)(1) and (230(e)(3).

Save or Spend?

Consumer advocates, among others, have often said that Americans use credit too freely and that the average American's debt is too high. But now I read that, over the past two years, "[h]ouseholds are borrowing less and saving more and that has acted as a drag on the overall economy by lowering consumer spending, which accounts for 70 percent of total economic activity." So ... Americans are not using their credit cards enough --- that is, they are not taking on more debt. Should consumers already in debt up to their eyeballs take on more debt or should they pay it off? I have no idea. Do you?

FDA Considering Approval of First Genetically Modified Animal for Human Consumption

Salmon grow slowly in the first year of life. Of course, raising them for food would be cheaper if they grew more quickly. But as explained in this article in today's Washington Post  . . .

"AquAdvantage is an Atlantic salmon that has been given a gene from the ocean pout, an eel-like fish, which allows the salmon to grow twice as fast as a traditional Atlantic salmon. It also contains a growth hormone from a Chinook salmon."

AquaBounty, the company that created AquAdvantage, first asked the FDA to approve its genetically engineered "salmon" in 1995. On September 19, 2010, an FDA advisory panel will hold a two-day public hearing to consider whether to recommend FDA approval. Consumer groups are opposed, saying that the public has been kept in the dark:

"'Critical information about the whole process has been kept from the public and organizations that focus on these issues,' said Wenonah Hauter, executive director of Food and Water Watch, part of a coalition of 31 organizations and restaurant chefs that is demanding that the FDA deny approval of the altered fish. 'There's a transparency problem.'"

David Horton Article: Arbitration as Delegation

David Horton of Loyola Law School Los Angeles haw written Arbitration as Delegation, 86 N.Y.U. L. Rev. (2011).  Here's the abstract:

Hundreds of millions of consumer and employment contracts include mandatory arbitration clauses, class arbitration waivers, and other terms that modify the rules of litigation. These provisions ride the wake of the Supreme Court’s expansive interpretation of the Federal Arbitration Act (“FAA”). For decades, scholars have criticized the Court’s arbitration jurisprudence for distorting Congress’s wishes and ignoring the fact that companies use fine print dispute resolution provisions as a clandestine way to eliminate substantive rights. This Article claims that the Court’s reading of the statute suffers from a deeper, more fundamental flaw: it transforms the FAA into an unconstitutional delegation of legislative power. Article I, section 1 of the Constitution forbids Congress from conferring the right to make law upon private parties. As construed by the Court, that is exactly what the FAA does. Invoking the statute, firms have created a parallel system of civil procedure for consumer and employment cases.This widespread procedural rulemaking is especially troubling because it establishes a private regulatory regime in an area that Congress has already attempted to regulate. In light of these concerns, the Article proposes several ways that the Court can narrow the statute and thus assuage concerns about its constitutionality.

Ohio State Abuses Trademark Law to Suppress a Fan Magazine and Website

by Paul Alan Levy

In today’s Washington Post, John Feinstein captures an important truth about college sports –- the print headline of his column is: “Greed is the most powerful tradition in college football.” (In the online addition, the headline described greed as "the new tradition"). Whether new or longstanding, a tradition of greed is typified by a dangerous decision issued this week by a federal judge in Columbus, Ohio, in which Ohio State University was able to use trademark law to suppress a fan web site and magazine devoted to its sports teams, established by a commercial publisher.  

The case arose because in the Columbus area, and indeed, throughout the State of Ohio, anything having to do with Ohio State’s major sports teams is a matter of intense public interest.  Responding to that interest, a Wisconsin company, which also has a web site called Badger Illustrated and as well as a magazine about the Wisconsin Badgers, created a web site called “Buckeye Illustrated” and announced plans to publish a “Buckeye Gameday” magazine and on “Ohio State Buckeye ebook,” all featuring lavish coverage of Ohio State’s popular sports teams and containing extensive advertising.  Instead of welcoming this additional coverage as a form of homage, and considering how a second set of web sites and magazines could intensify public interest and thus help promote the University, Ohio State went to court complaining of the defendants’ attempt to “rip off” Ohio State’s sports enterprise.  The university protested that it had just started to license out the right to publish sports programs, instead of doing such publications inhouse, and if outsiders could publish programs without permission, the value of this licensing would be reduced. 

Ohio State filed a substantial pile of TRO papers and set a hearing on six days notice.  In the minimal time allotted, the defendant’s lawyer, a solo practitioner, was able to file only a response that can fairly be described as flimsy.  The next day, the judge heard argument by telephone and granted not only a TRO but a preliminary injunction forbidding the defendants from using any domain names that includes the name Ohio State or Buckeyes, or using the Ohio State or Buckeyes name in any publication.