Consumer Law & Policy Blog

Hoofnagle, Urban, and Li on Mobile Payment Benefits and Privacy Concerns

Chris Jay Hoofnagle,

 

Jennifer M. Urban

 and

Su Li

, all of Berkeley have written Mobile Payments: Consumer Benefits & New Privacy Concerns.  Here's the abstract:

 

 

Payment systems that allow people to pay using their mobile phones are promised to reduce transaction fees, increase convenience, and enhance payment security. New mobile payment systems also are likely to make it easier for businesses to identify consumers, to collect more information about consumers, and to share more information about consumers’ purchases among more businesses. While many studies have reported security concerns as a barrier to adoption of mobile payment technologies, the privacy implications of these technologies have been under examined. To better understand Americans’ attitudes towards privacy in new transaction systems, we commissioned a nationwide, telephonic (wireline and wireless) survey of 1,200 households, focusing upon the ways that mobile payment systems are likely to share information about consumers’ purchases.

We found that Americans overwhelmingly oppose the revelation of contact information (phone number, email address, and home address) to merchants when making purchases with mobile payment systems. Furthermore, an even higher level of opposition exists to systems that track consumers’ movements through their mobile phones.

We explain some advantages of mobile payment systems, some challenges to their adoption in the United States, and then turn to our main finding: Americans overwhelming reject mobile payment systems that track their movements or share identification information with retailers. We then suggest a possible remedy for such information sharing: adapting provisions of California’s Song-Beverly Credit Card Act, which prohibits merchants from requesting personal information at the register when a consumer pays with a credit card, to mobile payments systems. Our survey results suggest that consumers would support limitations on information collection and transfer. Song-Beverly could be adopted to accommodate those who wish to share their transaction data.

 

Larry Tribe Proposes a Constitutional Amendment to Fix Campaign Finance

As part of Slate's series of guest columns on fixing the Constitution, Larry Tribe has proposed the following constitutional amendment to deal with  campaign finance problems:

Nothing in this Constitution shall be construed to forbid Congress or the states from imposing content-neutral limitations on private campaign contributions or independent political campaign expenditures. Nor shall this Constitution prevent Congress or the states from enacting systems of public campaign financing, including those designed to restrict the influence of private wealth by offsetting campaign spending or independent expenditures with increased public funding.

In his column about the proposed amendment, Tribe writes that the rise of super PACs has less to do with the decision in Citizens United than the 1976 decision in Buckley v. Valeo.

 

A Socratic Dialogue on the Affordable Care Act

Robert Weiner, a lawyer at the Arnold & Porter law firm, has given us this real-life socratic dialogue on the constitutionality of the Affordable Care Act between noted emeritus Professor Justin Good and an equally renown retired judge, Max Right.

More on Whether Google Uses Its Street View Service To Steal People's Personal Information

According to an article by William D'Urso at the LA Times, "[a]n investigation into Google Inc.'s controversial Street View service, which shows photos of residences and other buildings as part of the online company's mapping feature, is being reopened by a British government agency looking into privacy lapses. In a letter to the giant tech company, Britain's Information Commissioner's Office said the agency now considers it likely that private data — including user names, telephone numbers, emails and even online dating information — had been 'deliberately captured' by Google's Street View teams." Read about it here.

Public Policy and the Obesity Epidemic: The Stick or the Carrot

This article from the Economist compares the stick approach of New York mayor Michael Bloomberg (who wants to ban the sale of some large-sized sugary drinks by some types of retailers) and the carrot approach of first lady Michelle Obama (who wants to encourage kids to exercise more and make better food choices).

Important 7th Circuit Decision Rejecting Shareholder Derivative Suit

Today, in Booth Trust v. Crowley, No. 10-3285, in an opinion by Judge Frank Easterbrook, the Seventh Circuit threw out a case arising from the settlement of a shareholder derivative suit. And I mean Judge Easterbrook really threw it out.

Settling defendants often defend worthless settlements on the ground that the underlying claims also are (in their view) worthless. That argument has always struck me as one the courts should not accept, particularly where the settlement has a structural defect, such as one in which, for no good reason, some class members get something and others get nothing. (That's generally true of coupon settlements, because the value of the relief to each class member turns on a factor irrelevant to the case's merits: whether the class member wants or is able to use the coupon.)

My view has been that if a class suit is really worthless, a district court should not approve a worthless settlement (which of course will include attorney fees for plaintiffs' counsel); rather, it should dismiss the case for failure to state a claim. If a case is perceived as weak, but not worthless, however, the court should not approve a worthless settlement or one that irrationally provides some class members with something and others with nothing. Rather, it should insist that the settlement provide some real value and make sure that similarly situated class members are treated alike.

So, here's what Judge Easterbrook did in Booth Trust. He didn't just reverse a district court's settlement approval. In fact, the district court had itself disapproved the settlement, albeit on grounds that allowed the parties to fix things up and try again. (Indeed, the settling plaintiff's principal argument on appeal was that the appeal was moot in light of the district court's disapproval of the settlement.) Instead, Judge Easterbrook held that the case was meritless and sent the case back to the district court with instructions that the suit be dismissed. Whether that was an appropriate thing for an appellate judge to do is worth asking. (It is hard to see the basis for appellate jurisdiction over the merits given the lack of finality; the district court had disapproved the settlement and denied a motion to dismiss on the merits.) Throwing out the suit on appeal seems unusual for another reason: While the case was up on appeal, the parties had submitted a new settlement to the district court for approval.

Indeed, Judge Easterbrook seemed to acknowledge that throwing the case out was unusual given the posture of the case:

We could stop at this point and leave the parties to slug it out in the district court, with an appeal by whoever loses (or objects to a settlement). But this litigation is so feeble that it is best to end it immediately[.]

It may also be worth asking whether Judge Easterbrook's assessment of the merits of the underlying derivative suit -- which turns on antitrust issues -- was sound. (I have no way of assessing that.)

But I do think Judge Easterbrook's position is right in principle. An obviously meritless case should not benefit only lawyers and no one else.

Booth Trust also raised the question whether Devlin v. Scardelletti, 536 U.S. 1 (2002) -- which held that class action obejctors need not be intervenors to appeal a district court's approval of a class action settlement -- applies in the Rule 23.1 derivative suit context. Judge Easterbrook avoided answering the question simply by reversing the district court's denial of intervention to the appellant-objector before the court. He explained:

A district judge ought not try to insulate his decisions from appellate review by preventing a person from acquiring a status essential to that review. In Crawford v. Equifax Payment Services, Inc., 201 F.3d 877, 881 (7th Cir. 2000), we told district judges to grant intervention freely to persons who want to contest settlements in class actions under Fed. R. Civ. P. 23; that is no less true of derivative actions under Rule 23.1. ... We think it best to leave [the question whether Devlin applies to Rule 23.1 cases] to another day—a day that, if district judges grant party status to serious objectors as they should, need never arrive.

Read the appellate briefs here, here, here,and here.

[Note: The original version of this post has been amended to clarify a few procedural points and to add links to two appellate briefs.]

Times Article on Whether the OCC Will Change

by Jeff Sovern

The Office of the Comptroller of the Currency has long been the poster-child for an agency captured by the entities it regulates--in this case, national banks.  Thus, when states enacted anti-predatory lending statutes, the OCC declared them pre-empted as to national banks. Similarly, the OCC went to court against New York to protect national banks from state enforcement of fair lending laws.  But now the OCC has a new leader. Will things be different?  The Times has a report here. An excerpt:

Previously, O.C.C. regulators have emphasized that they want our banking system to be “safe and sound.” To that, Mr. Curry has added the word “fair.” A banking system needs to serve people and businesses, so that we don’t simply have, as he says, “a safe and sound national bank system just for sake of the system itself.”

“I’m committed to improving the agency’s reputation,” Mr. Curry told me.

The question is whether the host will reject the transplant.

FTC Enters Consent Decree With Data Broker That Sold Employers Information Culled From Internet About Prospective Employees

As explained in this article by Jenna Greene, "[d]ata broker Spokeo Inc. on June 12 agreed to pay $800,000 to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act when it sold employers profiles of prospective hires as a way to screen job applicants." Read the FTC's consent decree and press release.

Are Health Care Costs Continuing Their Steep Upward Trend?

The California Public Employees' Retirement System (CALPERS) has just announced that its health insurance premiums will go up an average of 9.6% in 2013. This announcement is significant because CALPERS is the country's third largest purchaser of health care benefits, and, so, you'd expect it to have pretty good bargaining power with the likes of Blue Cross Blue Shield, Kaiser, etc. And, yet, as discussed in this article, CALPERS is raising its rates by nearly 10% on average. By contrast, according to the Bureau of Labor Statistics, the general annual rate of inflation in April 2012 was just 2.3%.

Washington Post Reports on Wells Fargo Subprime Loan Officer in Baltimore Predatory Lending Case

Back in 2008, we reported on the suit that the City of Baltimore had filed against Wells Fargo alleging that the bank had targeted African-American neighborhoods in Baltimore for deceptive, predatory, and otherwise unfair mortgage practices. Several amended complaints later, the suit is still intact, and Judge Motz's latest opinion denying Wells Fargo's motion to dismiss is here. Discovery is going on now and, meanwhile, the Washington Post has just published an article profiling one of Baltimore's star witnesses, Wells Fargo's former top subprime loan officer, who described in a declaration how the bank drove home owners with good enough credit to qualify for prime loans to subprime loans because they were more profitable for the bank.