Consumer Law & Policy Blog

Study Finds Many Consumers Can't Tell That Native Ads are Paid Content

David A. Hyman of Georgetown, David J. Franklyn of the University of San Francisco, Calla E. Yee of Kilpatrick, Townsend & Stockton, and Mohammad Rahmati of Sharif University have written Going Native: Can Consumers Recognize Native Advertising? Does it Matter? 19 Yale J.L. & Tech. 77 (2017).  Here the abstract:

Native advertising, which matches the look and feel of unpaid news and editorials, has exploded online. The Federal Trade Commission has long required advertising to be clearly and conspicuously labeled, and it recently reiterated that these requirements apply to native advertising. We explore whether respondents can distinguish native advertising and “regular” ads from unpaid content, using 16 native ads, 5 “regular” ads, and 8 examples of news/editorial content, drawn from multiple sources and platforms. Overall, only 37% of respondents thought that the tested examples of native advertising were paid content, compared to 81% for “regular” advertising, with variation by platform, advertiser, and labeling. Modest labeling changes materially increased the number of respondents that correctly recognized that native ads are paid content – but even these improved results fell well short of those for “regular” advertising. We also explored labeling preferences and self-reported concern about native advertising. Our findings indicate that native advertising involves a significant risk of deception which self-regulation has not addressed.

CFPB sues four online lenders for collecting on debts consumers did not owe

The Consumer Financial Protection Bureau today filed suit against four online lenders – Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. – for deceiving consumers by collecting debt they were not legally owed. The CFPB alleges that the four lenders could not legally collect on these debts because the loans were void under state laws governing interest rate caps or the licensing of lenders. The CFPB alleges that the lenders made deceptive demands and illegally took money from consumer bank accounts for debts that consumers did not legally owe. The CFPB seeks to stop the unlawful practices, recoup relief for harmed consumers, and impose a penalty.

The CFPB's press release, with a link to the complaint, is here.

FCC chief begins rollback of net neutrality regulations

The Federal Communications Commission has begun the process to rollback net neutrality regulations. NPR has the story.

For the perspective of the inventor if the World Wide Web, Consumerist has this article.

Credit Union Times on the Financial Choice Act Hearing: Partisan Infighting

Here.

CFPB monthly report highlights complaints about student loans

The Consumer Financial Protection Bureau released today a monthly complaint report highlighting consumer complaints about student loans. The report shows that both private and federal student loan borrowers nationwide report persistent servicing breakdowns that may sideline their path to repayment. The report also highlights trends seen in complaints coming from Nevada.

The CFPB notes that, as of April 1, 2017, it has handled approximately 1,163,200 consumer complaints across all products. 

The monthly report is here.

House Financial Services Committee Reported Set to Markup Financial Choice Act Next Week

by Jeff Sovern

So CNNMoney reports here. The Committee will hold a hearing tomorrow; the witness list appears here.  Seems pretty rushed for a 600-page bill that would make major changes in financial regulation, including changing the structure of the CFPB, eliminating its power to prohibit unfair, deceptive, and abusive practices, abrogating its power to regulate arbitration, and plenty of other changes.  But that's how this Congress rolls. I suspect this bill will share the fate of Trumpcare, though it may get further in the legislative process than Trumpcare did. 

Did you know that "relying on race-based data to calculate tort damages is ... standard practice"?

That's a quote from the abstract of Valuing Black Lives: A Constitutional Challenge to the Use of Race-Based Tables in Calculating Tort Damages by law profs Kim Yuracko and Ronen Avraham. Here's the full abstract:

In 2011, a young couple eagerly expecting the birth of their first child moved into an apartment in Brooklyn, New York, excited to have a new home for their growing family. Their child, a son, was born healthy soon thereafter. One year later, however, the couple received devastating news. A routine medical exam had detected lead in their young son’s blood. It turned out that the dust from lead paint in their new home had been quietly poisoning their baby. The family quickly moved out, but permanent damage to the baby’s central nervous system had been done. Over the next several years he would manifest significant cognitive delays as well as severe social and emotional impairments. The baby’s mother sued and the landlord was found negligent.

In calculating damages, the critical question for the jury was how much would this young child have earned over the course of his life had he not become injured. In answering this question, experts for both the plaintiff and the defendant took into consideration, albeit to different extents, the fact that the baby was Hispanic and used this fact to offer lower damage estimates than they would have had the baby been white. Relying on race-based data to calculate tort damages is, after all, standard practice. The only thing unusual about the case was that the judge, Jack Weinstein, of the Eastern District of New [York], refused to allow it.

Ralph Nader's response to United's decision to maul one of its passengers for having the temerity to remain in a seat he paid for

Nader -- who took the airlines all the way to the Supreme Court way back when, and won -- has written this USA Today op-ed on the use of consumer power to bring the airlines down a few notches. 

Cortez Article: Regulation by Database

Nathan Cortez of SMU has written Regulation by Database, University of Colorado Law Review, Vol. 89, 2017. Here is the abstract:

The federal government currently publishes 195,245 searchable databases online, a number of which include information about private parties that is negative or unflattering in some way. Federal agencies increasingly publish adverse data not just to inform the public or promote transparency, but to pursue regulatory ends ⎯ to change the underlying behavior being reported. Such "regulation by database" has become a preferred method of regulation in recent years, despite scant attention from policymakers, courts, or scholars on its appropriate uses and safeguards.

This Article, then, evaluates the aspirations and burdens of regulation by database. Based on case studies of six important data sets (published by the CFPB, CPSC, EPA, FEC, FDA, and Medicare), the article proposes what I call "Good Government Data Practices" to ensure that databases are reliable, useful, and fair. More optimal data disclosures require careful design choices that consider both data inputs and outputs, including how to gather and process data, how to characterize them, and how to present them. The article envisions a decidedly modern role for government agencies as data "stewards" rather than as mere publishers or repositories.

Agency databases have proliferated on the belief that markets, regulation, and even democracy all require transparency, that sunlight is the best disinfectant. But as transparency has moved online ⎯ becoming more pervasive, more powerful, and more burdened with regulatory dimensions ⎯ we also must recognize that sunlight can also blind or even burn. It is in this spirit that I call for policymakers to embrace the government’s role as a data "steward," a sentinel that helps maximize the quality of data inputs and outputs via tailored procedures. The more reliable government data are, the more they can enlighten us and perhaps even deter unwanted behavior.

How Effective Are Threats in Debt Collection? Experiment Finds Threats of Prosecution for Nonpayment of Taxes More Effective Than Other Messsages Tested

Bloomberg reports in a story headlined How Detroit Deadbeats Taught Tax Collectors That Threats Really Work, on a study by Ben S. Meiselman titled Ghostbusting in Detroit: Evidence on Nonfilers from a Controlled Field Experiment.  No wonder some debt collectors use threats!