Consumer Law & Policy Blog

Paper Analyzes Testing of Consumer Disclosures

Talia B Gillis, a doctoral student at Harvard, has written Putting Disclosure to the Test: Toward Better Evidence-Based Policy. Here is the abstract:

Financial disclosures no longer enjoy the immunity from criticism they once had. While disclosures remain the hallmark of numerous areas of regulation, there is increasing skepticism as to whether disclosures are understood by consumers and do in fact improve consumer welfare. Debates on the virtues of disclosures overlook the process by which regulators continue to mandate disclosures. This article fills this gap by analyzing the testing of proposed disclosures, which is an increasingly popular way for regulators to establish the benefits of disclosure. If the testing methodology is misguided then the premise on which disclosures are adopted is flawed, leaving consumers unprotected. This article focuses on two recent major testing efforts: the European Union’s testing of fund disclosure and the Consumer Financial Protection Bureau’s testing of the integrated mortgage disclosures, which will go into effect on August 1, 2015.

Despite the substantial resources invested in these quantitative studies, regulation based on study results is unlikely to benefit consumers since the testing lacks both external and internal validity. The generalizability of the testing is called into question since the isolated conditions of testing overlook the reality of financial transactions. Moreover, the testing method mistakenly assumes a direct link between comprehension and improved decisions, and so erroneously uses comprehension tests. 

As disclosure becomes more central to people’s daily lives, from medical decision aids to nutritional labels, greater attention should be given to the testing policies that justify their implementation. This article proposes several ways to improve the content and design of quantitative studies as we enter the era of testing.

"The Pain Medication Conundrum"

...is the title of this thoughtful NYT piece, which considers the difficult balance doctors must strike in helping patients manage debilitating pain while avoiding feeding addition. The quote sums it up well:

A 2011 report from the Institute of Medicine highlighted how poorly the medical field handles pain. Undertreating pain, we [doctors] are admonished, violates the basic ethical principles of medicine. On the other hand, we are lambasted for overprescribing pain medications, enabling addicts and creating an epidemic of overdose deaths.

Unlike some of the issues we cover on this blog, this is one in which there are consumer interests on both sides of the balance doctors must strike -- a consumer interest in safety and another in effective medication.

Target reaches agreement with Visa over data breach

Target Corp has reached an agreement with Visa card issuers to reimburse up to $67 million in costs related to a data breach at Target in 2013. The breach compromised at least 40 million credit cards and may have resulted in the theft of personal information from as many as 110 million people. The Reuters story is here.

Anti-SLAPP Statute Extended to Wage Claim by Authors of Content of Public Interest

by Paul Alan Levy

Techdirt carries a discussion  of a recent decision dismissing a class action complaint filed against Yelp on behalf of Yelp users contending that, because their reviews provide content that allows Yelp to profit through the sale of advertising, reviewers are employees who are entitled to payment for their labor under the Fair Labor Standards Act.

Read this article: "The Lien Machine: New breed of investor profits by financing surgeries for desperate women patients"

The article was written by Reuters' reporters Alison Frankel and Jessica Dye. Here's a little taste of it:

In the little known world of medical lending, financiers invest in operations to remove pelvic implants from women suing device makers - and reap an inflated share of the payouts when cases settle. * * * Previously undisclosed deposition transcripts from ... investigations [instigated by pelvic mesh manufacturers] and Reuters interviews with mesh patients have provided rare details about a little-known business: investing in surgeries for injured plaintiffs. It’s a practice that has become deeply entangled with medical device litigation. Medical funders, often working through go-betweens like [certain entreprenuers] or doctors’ billing services, purchase medical bills at a deep discount from physicians, hospitals and others who have provided care to patients involved in personal injury litigation. Some medical funders also provide “concierge care” to these patients, fronting them travel and expense money at a high rate of interest.

Court decision destabilizes First Amendment law, with negative consequences for consumers

At the New York Times, reporter Adam Liptak writes about the Supreme Court's June decision in Reed v. Town of Gilbert and explains why what might have been an unremarkable First Amendment case may have significant consequences for a wide range of laws, including consumer protection laws.

The key move in Justice Thomas’s [majority] opinion was the vast expansion of what counts as content-based. The court used to say laws were content-based if they were adopted to suppress speech with which the government disagreed.

Justice Thomas took a different approach. Any law that singles out a topic for regulation, he said, discriminates based on content and is therefore presumptively unconstitutional.

Securities regulation is a topic. Drug labeling is a topic. Consumer protection is a topic.

The full article is here.

The High Cost of Fast Shipment

The New York Times carries a story about the punishing pace that Amazon staff have to endure as the company squeezes every ounce of productivity out of them.  Work-life balance?  What's that?

Law360: FTC Commissioner Joshua Wright to Step Down

Here.  He is expected to rejoin the George Mason Law School faculty. 

"The Sugar Water Workout"

That's the name of Brian McFadden's comic strip on how consumers can sensibly offset the negative health effects of sugary drinks through exercise (not really). McFadden's comic reminds me of Coke's funding of the oddly-named Global Energy Balance Network.

DC Circuit reinstates antitrust case against Visa and Mastercard

The court explained:

The crux of the Plaintiffs’ complaints is that when someone uses a non-bank ATM, the cardholder pays a greater fee and the ATM operator earns a lower return on each transaction because of certain Visa and MasterCard network rules. These rules prohibit differential pricing based on the cost of the network that links the ATM to the cardholder’s bank. In other words, the Plaintiffs allege anticompetitive harm because Visa and MasterCard prevent an independent operator from charging less, and potentially earning more, when an ATM transaction is processed through a network unaffiliated with Visa and MasterCard.

The district court had dismissed the case for lack of standing and on the merits, but the D.C. Circuit reversed, explaining among other things that the district court erred in rejecting the plaintiffs' theory of economic injury as speculative. It is permissible, the court of appeals explained, to rely on economic theories of how anticompetitive behavior will harm consumers if these allegations are (as here) provable at trial.

Read the decision, issued earlier this month, here.