Consumer Law & Policy Blog

Solove Paper on Privacy Self-Management vs. Paternalism

Daniel J. Solove of GW has written Privacy Self-Management and the Consent Paradox, 126 Harvard Law Review (2013).  Here's the abstract:

The current regulatory approach for protecting privacy involves what I refer to as the “privacy self-management model” – the law provides people with a set of rights to enable them to decide for themselves about how to weigh the costs and benefits of the collection, use, or disclosure of their information. People’s consent legitimizes nearly any form of collection, use, and disclosure of personal data.

Although the privacy self-management model is certainly a laudable and necessary component of any regulatory regime, I contend in this essay that it is being asked to do work beyond its capabilities. Privacy self-management does not provide meaningful control. Empirical and social science research has undermined key assumptions about how people make decisions regarding their data, assumptions that underpin and legitimize the privacy self-management model.

Moreover, even if individuals were well-informed and rational, they still cannot appropriately self-manage their privacy due to a series of problems. For example, the problem of scale involves the fact that there are too many companies collecting and using data for a person to be able to manage privacy with every one. The problem of aggregation involves the fact that privacy harms often consist of an aggregation of disparate pieces of data, and there is no way for people to assess whether revealing any piece of information will sometime later on, when combined with other data, reveal something sensitive or cause harm. The essay also discusses a number of other problems.

In order to advance, privacy law and policy must confront a complex and confounding paradox with consent. Consent to collection, use, and disclosure of personal data is often not meaningful, and the most apparent solution – paternalistic measures – even more directly denies people the freedom to make consensual choices about their data. No matter which direction the law takes, consent will be limited, and a way out of this dilemma remains elusive.

 

 

Petition to Bar Caller ID Spoofing by Telemarketers

Here.  Nice to see consumer law getting attention in petitions.  

Crushing Student Loan Delinquency

We've covered the issue of the nation's huge student loan debt many times before. Many people are way behind on their payments and nearly all of the loans are made by or guaranteed by the federal government. This Wall Street Journal article explains the current situation. Here's an excerpt that describes differences between student loan debt and other consumer debt and the problems student loan debtors face once they fall behind:

Unlike most other types of consumer credit, student debt is extremely difficult to discharge in bankruptcy. After falling behind on payments, a borrower typically finds it harder to obtain other types of consumer loans, or can only do so at higher interest rates… Since the end of 2007, just before the financial crisis hit, total student debt has grown by more than 56%, adjusted for inflation… During that time, overall household debt—including mortgages, student loans, auto loans and credit cards—fell by 18%, to $11.31 trillion as of Sept. 30 [of this year].

Comments Sought on Revisions to NY UCC

A UCC omnibus bill being introduced in the New York Legislature would revise UCC Articles 1, 3, 4, 7, 8, and 9, to embody the latest UCC Model Versions.  If you have views about particular advantages and disadvantages to adoption, or suggested revisions, Norman Silber would be interested in knowing about them.  Please email him at Norman.Silber@Hofstra.edu

More Evidence that Consumers Don't Use TILA Forms to Comparison Shop for Mortgages

by Jeff Sovern

A new Fannie Mae survey reports that nearly half of lower-income respondents and more than a third of higher-income respondents obtain quotes from only one mortgage lender.  The survey also confirms findings in other reports that "a substantial portion of all consumers do not understand key mortgage elements." In particular, 41% of borrowers were not able to say the highest monthly payment required under an adjustable rate loan--a number that is relevant to figuing out whether the loan is affordable. More and more, mandatory mortgage counseling looks like the way to go. 

Mortgage tax break up for debate in fiscal cliff talks

In the fiscal cliff negotiations, a lot is on the table. One policy formally viewed as untouchable but now up for discussion, the Washington Post reports, is the mortgage-interest deduction, which is designed to encourage home ownership but has been criticized as responsible for inflating home prices and benefiting the wealthy disproportionally. The Post story provides a nice summary of the debate, including which groups are thought to benefit from the deduction and the arguments for and against it.

United Airlines Sues Website Critical of United Airlines

by Brian Wolfman

One of the nice things about the Internet is that it brings down the cost of communicating with the public, potentially democratizing free speech. At fairly low cost, consumers can establish websites that criticize big businesses. Sometimes those big businesses don't like that and sue the owners of the critical websites. Often the big businesses can't go after the speech itself. There's that pesky First Amendment (and similar free-speech rights in countries other than the U.S.). So, sometimes the big businesses try to shut down or limit the effectiveness of critical websites on trademark theories, often claiming that the visitors to the websites will be confused and think that the critical websites are somehow associated with the big businesses. (It's just like a big corporation, after all, to establish a website critical of itself!)

Here's a Chicago Tribune story about a website critical of United Airlines' treatment of consumers that has been sued in Canada by United Airlines on the theory that consumers will be confused and think that the critical site is sponsored by or is otherwise associated with United. The owner of the critical site, Jeremey Cooperstock, says that his site's design is intended to be a parody of United's site and that "[n]o reasonable person would possibly confuse my page with United's own page." The site says at the top of its homepage that "Untied" is an "Evil Alliance Member" and that "This is not the website of United Airlines." (The mispelling of "United" and the emphasis in "not" are both on Cooperstock's website.)

Is United just trying to squelch consumer criticism? Would anyone be confused and think United is behind Cooperstock's site? Go to the website and decide for yourself.

 

 

EPA Bans BP From Future Federal Contracts

As explained here, the Environmental Protection Agency has banned BP from future federal contracts in light of the company's "lack of business integrity" evidenced by its misconduct surrounding the 2010 oil spill in the Gulf of Mexico. The ban is temporary and will be lifted when BP, according to the EPA, "can provide sufficient evidence to EPA demonstrating that it meets federal business standards." Read the EPA's press release.

Protecting Your Privacy on the Internet

This article by Richard Chen provides a bunch of tips about how to protect your privacy on the Internet. Among other things, he suggests forgoing Google for DuckDuckGo, which claims that it doesn't send information about you to other sites (as Google does) and doesn't collect personal information about you (as Google does) -- for instance, it doesn't save your IP address or create cookies on your computer. I'm curious: Is Chen's preference for DuckDuckGo justified?
 

Pew Study of Arbitration Clauses in Checking Accounts

Here.  Some highlights:

Of the 92 financial institutions studied, 43 percent contain mandatory binding arbitration clauses. This number increases to 47 percent when considering only banks, because none of the credit unions studied include an arbitration clause in their account agreements.

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The larger the financial institution, the more likely an account agreement will contain a clause requiring mandatory binding arbitration.

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Three-quarters (75 percent) of account agreements that contain mandatory binding arbitration clauses likewise contain a provision barring consumers from joining a class
action against their financial institution, either in arbitration or litigation.

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More than one in 10 (13 percent) account agreements shorten the legally prescribed statute of limitations for consumers to bring disputes against their bank or credit union.

The range for these clauses is three months to two years, with a median of one year.