Consumer Law & Policy Blog

The gap between rich and poor, life expectancy, and social security benefits

The gap between rich and poor, life expectancy, and social security benefits are discussed in this article by Josh Zumbrun, which in turn discusses recent studies by a Stanford University economist and the U.S. Government Accountability Office. Here is an excerpt of Zumbrun's article:

A growing body of research in recent years points to the striking fact that wealthier people are living significantly longer than less wealthy people, and the gap appears to be widening. Just this week, a study led by Stanford University economist Raj Chetty, showed that life expectancy differed for the top 1% and bottom 1% of the income distribution by 15 years for men and by 10 years for women. Now, a new study from the Government Accountability Office shows the dramatic effect this is having on Social Security. To show the effect of changing U.S. life expectancy, the GAO studied the benefits that men earning $20,000 or $80,000 could expect to receive from the Social Security system over the course of their lives. * * * An income of $20,000 is roughly the 25th percentile. At age 62, the average U.S. man will live another 21 years. The benefits he would expect to earn over the rest of his life would be about $156,000. But as the research of Mr. Chetty and others has shown, the average man at this income range won’t live quite that long. Based on the average life expectancy of low-income men, they should expect to collect only $138,000 from Social Security.

 

Discussions of college admissions skewed toward elite schools

When policymakers and journalists talk about college admissions (as they often do this time of year, because it's admission season), it tends to sound like this, Fivethirtyeight recounts:

High school seniors spend months visiting colleges; writing essays; wrangling letters of recommendation; and practicing, taking and retaking an alphabet soup of ACTs, SATs and AP exams. Then the really hard part: months of nervously waiting to find out if they are among the lucky few....

However, [m]ost students never have to write a college entrance essay, pad a résumé or sweet-talk a potential letter-writer. Nor are most, as The Atlantic put it Monday, 'obsessively checking their mailboxes' awaiting acceptance decisions. (Never mind that for most schools, those decisions now arrive online.)"

Fivethirtyeight gives some numbers to put the skewing effect in perspective:

According to data from the Department of Education,1 more than three-quarters of U.S. undergraduates attend colleges that accept at least half their applicants; just 4 percent attend schools that accept 25 percent or less, and hardly any — well under 1 percent — attend schools like Harvard and Yale that accept less than 10 percent.

The piece provides a useful chart that highlights other aspects of the "archetypal" college experience (as portrayed in the media) that leave out large segments of students, including older students, students in primarily non-residential programs, and students getting associates' degrees or certificates. Read more here.

Tax returns and privacy

Check out this ominous piece from the Wall St. Journal, "How Private Is Your Tax Return?" which discusses the privacy practices of private preparers and tax software regarding filers' private information.

Christopher Article on Mobile Banking and the Unbanked

Catherine Martin Christopher of Texas Tech has written Mobile Banking: The Answer for the Unbanked in America? 65 Catholic University Law Review, (2015 ).  Here is the abstract:

In the U.S., the poor often lack access to mainstream banking services. Instead, they rely on expensive, poorly regulated alternatives like check cashers, payday lenders, pawn shops, and auto title lenders. These financial products jeopardize poor people’s financial and physical security.

Both government officials and private enterprise have attempted to craft solutions to the banking access problem by pushing adoption of traditional banking products, but so far these attempts have fallen short. This Article asserts that mobile banking may be a transformative technology that can significantly increase financial inclusion in the United States.

The Article discusses current statistics and demographics of mobile phone ownership in the United States, the success of overseas mobile banking programs aimed at helping the poor, and the current prepaid card industry in the United States. The Article draws lessons from these case studies and asserts that bringing the unbanked into the regulated banking system is worth private investment in mobile banking products and platforms. (The Article also argues that if private entities do not find it fiscally feasible to pursue this market, public funds can and should be expended.) The Article recommends specific account features that would benefit the currently unbanked, such as having an option for transaction accounts in addition to savings accounts, providing mobile applications that provide financial education, and allowing for users to open accounts over their mobile phones. It also proposes that customer identification procedure can be relaxed for small-balance accounts designed specifically to increase financial inclusion.

Bernie 2016 Joins Long Line of Campaign Committees Abusing Trademark Law to Suppress Criticism

What is it about presidential campaigns that brings out some of the worst examples of trademark bullying?

Two years ago, we shot down bogus a trademark demand by the Ready for Hillary pre-campaign PAC, which tried to suppress Liberty Maniac's “Ready for Oligarchy” parody. (Readers of this blog may remember Liberty Maniacs (and its owner, Dan McCall) for having drawn threats from the NSA for calling it “The only part of the government that actually listens.”)   Last year, it was a demand from Ben Carson’s campaign trying to take the Carson name off both critical and complimentary campaign wear.  In 2012, Ron Paul’s campaign committee contended that its trademark was infringed by a YouTube video that satirized its efforts.  And in 2008, we had to seek a declaratory judgment against the Republican National Committee to get it to back off an effort to use trademark to prevent people from using the elephant logo to describe the Republican Party as an object of affection or derision.  Each time, the lawyers representing candidates or political committees made stupid legal threats based on a misunderstanding of trademark law (or using pretended trademark law claims as an excuse), and each time, the public response to the demands taught them about the consequences of making such demands. 

Now it is the turn of Bernie Sanders' campaign to learn that lesson.  Yesterday a Seattle lawyer claiming to represent "Bernie 2016, Inc." sent a demand letter to Daniel McCall of Liberty Maniacs, contending that the following parody image, which plays on Sanders' personal background as an avowedly Socialist candidate by referring to him as a "comrade" and linking him to Communist leaders from the 19th and 20th centuries, might confuse users into believing that the Sanders campaign is voluntarily associating its candidate with the communist party.   




Invoking the campaign’s trademark and copyright in the Bernie 2016 logo, a lawyer named Claire Hawkins has demanded that McCall stop purveying this image.  

House Financial Services Committee Again Passes Bill to Cripple CFPB

by Jeff Sovern

The Hill has the story with the headline House panel passes bills to ramp up CFPB oversight.  For more on why "oversight" will hurt consumers, see here and here.

Center for Responsible Lending Study Finds MD and NC Collection Reforms Didn't Impair Consumer Credit

Here.  Here is the Executive Summary:

Debt buyers, specialized debt-collection companies, purchase defaulted consumer debt from creditors such as credit card companies for pennies on the dollar. Debt buyers then attempt to collect the debt, often by suing borrowers in court. Unfortunately, because debts are typically sold to debt buyers without fully verifying the accuracy of the borrower’s identity, amount of the debt, or status of repayment, the information used as a basis to collect from consumers may be faulty. As a consequence, borrowers can find themselves facing a default judgment from court on a debt that they do not in fact owe.

Two states—North Carolina and Maryland—have tried to address these issues through substantive reforms to debt-collection processes in their respective courts. At the time these reforms were being debated, the debt-buying industry claimed that these regulations would result in less credit being made available in those states. However, our analysis of the change in new credit card extensions in North Carolina and Maryland after reforms took effect does not show any negative impact to consumer credit. Specifically, we find that:

• Credit availability in North Carolina and Maryland appears to follow national trends rather than being impacted by regulatory changes.

• North Carolina and Maryland consumers seeking new credit cards generally fared better than consumers in peer states.

• Sub- and near-prime consumers in North Carolina and Maryland fared at least as well as those nationally and in peer states regardless of debt-buying reforms.

State and federal officials should continue to strengthen the rules and laws for debt collection and debt buying to better protect consumers. Debt collectors should be required to possess and review full documentation about a borrower and the borrower’s obligations before pursuing collections or a lawsuit. In addition, court rules should be strengthened to ensure adequate evidence is presented for a debt collector to prevail in court.

 

Cal. Supreme Court: workers must be allowed to sit down

Last week, the California Supreme Court ruled unanimously that state labor law prohibits employers from forcing workers to perform their job on their feet when their tasks could be done sitting down. The ruling, which requires consideration of the totality of circumstances in determining whether seats are required for a particular job, was handed down in a class action brought on behalf of CVS cashiers. One cashier was denied a seat even after she became pregnant and standing caused her legs to swell. The L.A. Times reports.

Court strikes down designation of MetLife as "too big to fail"; opinion was inexplicably sealed

As you may have heard, on March 30, a D.C. district court threw out a designation by the federal Financial Stability Oversight Council (FSOC) that MetLife needs to comply with special government safeguards under Dodd-Frank for entities whose "material financial distress" could "pose a threat to the financial stability of the United States." (Here's coverage from the Washington Post.) The rationale for the court's decision was two-fold: the FSOC changed its interpretation of Dodd-Frank midstream, and the FSOC refused to consider the costs of the designation.

When the opinion was handed down, it was under seal. A week later, it was released in full. (You can read it here; it still says "Sealed Opinion" at the top.) As you'll see if you read it, it's hard to tell what was so secret that it had to be sealed in the first place. It's good that the decision on such an important issue is out, but the reflexive sealing that preceded the release is part of the troubling trend of secrecy in judicial opinions (see, for instance, here and here). As the Fourth Circuit has written, "Without access to judicial opinions, public oversight of the courts, including the processes and the outcomes they produce, would be impossible."

Goldman might pay less than the face value of its settlement

We wrote yesterday about Goldman's $5 billion settlement with the government in connection with the financial crisis. The New York Times reports that fine print in the deal might get Goldman off the hook for up to 20% of that amount, through the use of various credits. Read the details here.

(HT: alert reader Matthew Bruckner.)