Consumer Law & Policy Blog

Amy Schmitz on Gender and Consumer Contracts

Amy Schmitz of Colorado has written Sex Matters: Considering Gender in Consumer Contracts, 19 Cardozo Journal of Law & Gender 437 (2013). Here's the abstract:

 

We hear about the so-called “War on Women” and persisting salary gaps between men and women in the popular media, but contracts scholars and policymakers rarely discuss gender. Instead, dominant voices in the contracts field often reflect classical and economics-driven theories built on assumptions of gender neutral and economically rational actors. Furthermore, many mistakenly assume that market competition and antidiscrimination legislation address any improper biases in contracting. This Article therefore aims to shed light on gender’s importance by distilling data from my own e-survey of Colorado consumers along with others’ research regarding gender differences in contract outcomes, interests and behaviors. In light of this research, the Article calls for open discussion of gender in contract and consumer law. It also suggests ideas for considering research findings and the importance of context in designing financial literacy and contract education programs that acknowledge gender while honoring individuality and avoiding stereotype reinforcement.

Securities and Exchange Commission to begin demanding admissions of guilt in some settlements

by Brian Wolfman

This June 21 article by James Stewart explains that

In a departure from long-established practice, the recently confirmed chairwoman of the Securities and Exchange Commission, Mary Jo White, said this week that defendants would no longer be allowed to settle some cases while “neither admitting nor denying” wrongdoing. “In the interest of public accountability, you need admissions” in some cases, Ms. White told me. “Defendants are going to have to own up to their conduct on the public record,” she said. “This will help with deterrence, and it’s a matter of strengthening our hand in terms of enforcement.” * * * That this approach became such a heated public issue is in large part because of the provocative efforts of Judge Jed S. Rakoff of Federal District Court, who has twice threatened to derail settlements with large financial institutions that neither admitted nor denied the government’s allegations. In late 2011, he ruled that he couldn’t assess the fairness of the agency’s settlement with Citigroup in a complex mortgage case without knowing what, if anything, Citigroup had actually done. In his ruling, he said that settling with defendants who neither admit nor deny the allegations is a policy “hallowed by history but not by reason.” He described the settlement, which was for $285 million, as “pocket change” for a giant bank like Citigroup. Other judges have followed Judge Rakoff’s lead, and an appeal of his Citigroup ruling is pending before the Court of Appeals for the Second Circuit.

It will be interesting to see how often the SEC is able to obtain settlements that include admissions of the truth of the agency's allegations. It will also be interesting to see how often SEC settlements include admissions of legal wrongdoing as well as admissions of the agency's factual allegations. Bear in mind that a key reason that targets of federal enforcement don't want to admit liability is so that the settlement of government charges cannot be used against them in private civil litigation.

The SEC is not the only government agency that routinely enters into neither-admit-nor-deny settlements. The Federal Trade Commission does so as well. In this October 2012 interview in "The Antitrust Source," FTC Commissioner Maureen Ohlhausen explained why she favors continued use of these settlements:

ANTITRUST SOURCE: Many federal agencies permit respondents to deny liability or to “neither
admit nor deny” liability in settlement agreements. Recently, some judges have pushed back
against that practice. Do you have a view on the appropriateness of permitting a respondent to
expressly deny liability when entering into an FTC consent agreement?

OHLHAUSEN: I do. At the FTC, our role is to stop harm that’s occurring in the market and to get the best result for consumers. We are not an agency that has authority to punish parties. With that goal in mind, I think whatever preserves the most flexibility for staff to be able to stop the conduct as soon as possible and get the best redress for consumers should be our priority. Requiring defendants to admit liability would be a problem, as most well-counseled defendants would not settle on those terms and it’s not fair to impose this only on the less well-counseled defendants, who may not be any more guilty than the well-counseled. If we were to go to a standard under which parties had to admit liability, that would make it extremely difficult to reach settlements, which often are very efficient options to stop the bad conduct and get redress for consumers.... I believe this issue [raised by the courts] is merely a skirmish that should not impel us to expend resources to change our practice, which is currently consistent with that of DOJ and other agencies. Our proper focus is on stopping bad practices and obtaining redress for consumers, which is best achieved by preserving some bargaining leverage for staff on the wording in settlements.

The Consumer Financial Protection Bureau has recently begun exercising its enforcement powers. We posted last week about two CFPB consent orders (go here and here) against U.S. Bank and one of its non-bank partners aimed at stopping misleading lending practices that target U.S. service members. Those consent orders contain this language: "By this Stipulation, Respondent has consented to the issuance of this Consent Order ... by the Bureau under [relevant law], without admitting or denying any of the findings of fact or conclusions of law, except that Respondent admits the Bureau’s jurisdiction over Respondent and the subject matter of this action."

The high cost of maternity care

Consumers in this country pay more for health care than in other developed countries. And maternity care provides a dramatic example, as explained in this article by Elisabeth Rosenthal. Check out this chart from Rosenthal's article:

Here's an excerpt:

[T]hough maternity care costs far less in other developed countries than it does in the United States, studies show that their citizens do not have less access to care or to high-tech care during pregnancy than Americans. “It’s not primarily that we get a different bundle of services when we have a baby,” said Gerard Anderson, an economist at the Johns Hopkins School of Public Health who studies international health costs. “It’s that we pay individually for each service and pay more for the services we receive.” Those payment incentives for providers also mean that American women with normal pregnancies tend to get more of everything, necessary or not, from blood tests to ultrasound scans, said Katy Kozhimannil, a professor at the University of Minnesota School of Public Health who studies the cost of women’s health care. Financially, they suffer the consequences. In 2011, 62 percent of women in the United States covered by private plans that were not obtained through an employer lacked maternity coverage, like Ms. Martin. But even many women with coverage are feeling the pinch as insurers demand higher co-payments and deductibles and exclude many pregnancy-related services. From 2004 to 2010, the prices that insurers paid for childbirth — one of the most universal medical encounters — rose 49 percent for vaginal births and 41 percent for Caesarean sections in the United States, with average out-of-pocket costs rising fourfold, according to a recent report by Truven that was commissioned by three health care groups. The average total price charged for pregnancy and newborn care was about $30,000 for a vaginal delivery and $50,000 for a C-section, with commercial insurers paying out an average of $18,329 and $27,866, the report found.