CL&P Blog

How can you protect your privacy online?

How can you protect your privacy online? A New York Times article today suggests that you can't.

People concerned about privacy often try to be “careful” online. They stay off social media, or if they’re on it, they post cautiously. They don’t share information about their religious beliefs, personal life, health status or political views. By doing so, they think they are protecting their privacy.

But they are wrong. Because of technological advances and the sheer amount of data now available about billions of other people, discretion no longer suffices to protect your privacy. Computer algorithms and network analyses can now infer, with a sufficiently high degree of accuracy, a wide range of things about you that you may have never disclosed, including your moods, your political beliefs, your sexual orientation and your health.

There is no longer such a thing as individually “opting out” of our privacy-compromised world.

The full article is here.

Odinet article on student debt, fintech, and discrimination

Christopher K. Odinet of Oklahoma has written The New Data of Student Debt, 92 Southern California Law Review (Forthcoming). Here is the abstract:

Silicon Valley is increasingly setting its sights on student lending. Financial technology (fintech) firms such as SoFi, CommonBond, and Upstart are ever-expanding their online lending activities to help students finance or refinance educational expenses. These online companies are using a wide array of alternative, education-based data points — ranging from applicants’ chosen majors, assessment scores, the college or university they attend, job history, and cohort default rates — to determine creditworthiness. Fintech firms argue that through their low overhead and innovative approaches to lending they are able to widen access to credit for underserved Americans. Indeed, there is much to recommend when it comes to using different kinds of information about young consumers in order assess their financial ability. Student borrowers are notoriously disadvantaged by the extant scoring system that heavily favors having a prior credit history. Yet, there are also downsides to the use of education-based data by private lenders. This Article critiques the use of this kind of borrower information, arguing that while it can have a positive effect in promoting social mobility, it could also have significant downsides. Chief among these are reifying existing credit barriers along income and class lines and further contributing to discriminatory lending practices that harm women, black and Latino Americans, and minority groups. The discrimination issue is particularly difficult because of the novel and opaque underwriting algorithms that facilitate these online loans. This Article concludes by proposing three-pillared regulatory guidelines for fintech credit firms to use in designing, implementing, and monitoring their education-based data underwriting systems.

Prince & Schwarcz article on how AI is a game-changer for proxy discrimination

Anya Prince of Iowa and Daniel Schwarcz of Minnesota have written Proxy Discrimination in the Age of Artificial Intelligence and Big Data, Iowa Law Review, Forthcoming. Here's the abstract:

Big data and Artificial Intelligence (“AI”) are revolutionizing the ways in which firms, governments, and employers classify individuals. Surprisingly, however, one of the most important threats to antidiscrimination regimes posed by this revolution is largely unexplored or misunderstood in the extant literature. This is the risk that modern algorithms will result in “proxy discrimination.” Proxy discrimination is a particularly pernicious subset of disparate impact. Like all forms of disparate impact, it involves a facially-neutral practice that disproportionately harms members of a protected class. But a practice producing a disparate impact only amounts to proxy discrimination when the usefulness to the discriminator of the facially-neutral practice derives, at least in part, from the very fact that it produces a disparate impact. Historically, this occurred when a firm intentionally sought to discriminate against members of a protected class by relying on a proxy for class membership, such as zip code. However, proxy discrimination need not be intentional when membership in a protected class is predictive of a discriminator’s facially-neutral goal, making discrimination “rational.” In these cases, firms may unwittingly proxy discriminate, knowing only that a facially-neutral practice produces desirable outcomes. This Article argues that AI and big data are game changers when it comes to this risk of unintentional, but “rational,” proxy discrimination. AIs armed with big data are inherently structured to engage in proxy discrimination whenever they are deprived of information about membership in a legally-suspect class that is genuinely predictive of a legitimate objective. Simply denying AIs access to the most intuitive proxies for predictive but suspect characteristics does little to thwart this process; instead it simply causes AIs to locate less intuitive proxies. For these reasons, as AIs become even smarter and big data becomes even bigger, proxy discrimination will represent an increasingly fundamental challenge to anti-discrimination regimes that seek to limit “rational discrimination.” This Article offers a menu of potential strategies for combatting this risk of proxy discrimination by AI, including prohibiting the use of non-approved types of discrimination, mandating the collection and disclosure of data about impacted individuals’ membership in legally protected classes, and requiring firms to employ statistical models that isolate only the predictive power of non-suspect variables.

Anticipating the CFPB's Debt Collection Rules

Reporter Renae Merle has a story up at the Washington Post about the debt collection rules that the CFPB is expected to unveil “in a few weeks.” The story was prompted, in part, by a recent speech given by CFPB Director Kathy Kraninger during which she “laid out a business-friendly vision for the CFPB.” The article highlights what will certainly be contentious issues addressed by the new rules, like how, and how often, debt collectors are allowed to contact consumers.

The full story is available here.

Sandy Hook, gun-maker liability, and state consumer-protection law

Take a good look at this easy-to-read, informative essay by law prof Heidi Li Feldman in the Harvard Law Review blog. In Why the Latest Ruling in the Sandy Hook Shooting Litigation Matters, Feldman explains that, among other things, the Connecticut Supreme Court's recent decision in Soto v. Bushmaster Firearms (concerning the prospect of liability for gun manufacturers, distributors, and direct sellers in the Sandy Hook massacre) is potentially important as a matter of state UDAP law.

NYT on the CFPB: "Mick Mulvaney’s Master Class in Destroying the Government From Within"

The New York Times has a lengthy article on Mick Mulvaney's tenure as acting director of the Consumer Financial Protection Bureau.

This account of Mulvaney’s tenure is based on interviews with more than 60 current or former bureau employees, current and former Mulvaney aides, consumer advocates and financial-industry executives and lobbyists, as well as hundreds of pages of internal bureau documents obtained by The New York Times and others. When Mulvaney took over, the fledgling C.F.P.B. was perhaps Washington’s most feared financial regulator: It announced dozens of cases annually against abusive debt collectors, sloppy credit agencies and predatory lenders, and it was poised to force sweeping changes on the $30 billion payday-loan industry, one of the few corners of the financial world that operates free of federal regulation. What he left behind is an agency whose very mission is now a matter of bitter dispute. “The bureau was constructed really deliberately to protect ordinary people,” says Lisa Donner, the head of Americans for Financial Reform. “He’s taken it apart — dismantled it, piece by piece, brick by brick.”

Although Mulvaney has move don to serve as White House Chief of Staff, he had a notable on the work of the CFPB.

Over the last year, Mulvaney’s temporary hiring freeze has turned into an indefinite one, slowly shrinking the C.F.P.B.’s staff by attrition. Bureau news releases, once packed with colorful details about abusive lending practices, have been toned down to dry legalese. According to a report by Christopher Peterson, a senior fellow at the Consumer Federation of America, enforcement at the bureau appears to have dwindled radically. In 2018, the bureau announced just 11 lawsuits or settlements, less than a third of the number during Cordray’s last year. In the months since Mulvaney reorganized the Office of Fair Lending, the bureau has not brought a single case alleging illegal discrimination. While Mulvaney pledged data-driven enforcement, his bureau brought only one case against debt collectors, who account for more complaints to the C.F.P.B. than almost any other industry. Where Mulvaney or his successor have allowed cases to go forward, lenders have often settled with lowered fines or none at all. When the bureau settled a three-year prosecution of a group of payday lenders called NDG Enterprise — which found that the group had falsely threatened American customers with arrest and imprisonment if they failed to repay loans — NDG walked away without paying a cent.

The full article is here.

Online lending company settles FTC charges of deceptive and unfair servicing practices

Avant, LLC, an online lending company, has agreed to settle the Federal Trade Commission’s charges that it engaged in deceptive and unfair loan servicing practices, including imposing unauthorized charges on consumers’ accounts and unlawfully requiring consumers to consent to automatic payments from their bank accounts.

According to the FTC’s complaint, Avant offers unsecured installment loans for consumers through its website. The FTC charged that in many cases, the company falsely advertised that it would accept payments by credit or debit cards, when in fact it rejected these forms of payments. The FTC also alleged that the company withdrew money from consumers’ accounts or charged their credit cards without authorization. In some instances, Avant charged consumers duplicate payments without authorization, improperly taking consumers’ monthly payments twice or more in one month. For example, one consumer’s monthly payment was debited from his account 11 times in a single day. In many cases when consumers complained about the unauthorized charges, Avant allegedly insisted that the consumers authorized the charges and refused to provide a refund. 

The stipulated final order imposes a judgment of $3.85 million, which will be returned to consumers who were harmed by Avant’s unlawful practices.

Under the settlement order, Avant will be prohibited from taking unauthorized payments and from collecting payment by means of remotely created check. The company also is prohibited from misrepresenting: the methods of payment accepted for monthly payments, partial payments, payoffs, or any other purpose; the amount of payment that will be sufficient to pay off in its entirety the balance of an account; when payments will be applied or credited; or any material fact regarding payments, fees, or charges.

Bruckner et al. article on when the DOE should not contest the discharge of student loans

Matthew A. Bruckner of Howard, Brook Gotberg of Missouri, Dalié Jiménez of Irvine and Harvard's Center on the Legal Profession, and Chrystin D. Ondersma of Rutgers have written No-Contest Discharge for Uncollectable Student Loans, forthcoming in the University of Colorado Law Review (2020). Here is the abstract:

Over 44 million Americans owe more than 1.4 trillion dollars in student loan debt. This debt is uniquely difficult to shed in bankruptcy; even attempting to do so usually requires costly and contentious litigation with the Department of Education, and initial success may be followed by years of appeals by the Department of Education. As a result, very few student loan borrowers even attempt to discharge their student loan debt in bankruptcy.

In this Article, we call on the Department of Education to develop a set of nine easily calculable and verifiable circumstances in which it will not contest a debtor’s attempt to discharge her student loan debt. Nearly every category of “no-contest” discharge represents a circumstance where the debtor would clearly suffer an undue hardship if forced to continue to attempt repayment, such that the Department of Education should conserve taxpayer dollars by consenting to discharge. Specifically, we urge the Department of Education to allow a “no-contest” discharge when the debtor’s income is less than 150% of the federal poverty level and:
(1) household income has been at or below the federal poverty level for the last four years;
(2) the debtor receives disability benefits under the Social Security Act;
(3) the debtor receives disability benefits because of military service;
(4) the debtor’s income is derived solely from retirement benefits;
(5) the debtor is a caregiver of an adult or child as defined in the Lifetime Respite Care Act;
(6) the debtor is a family caregiver of an eligible veteran;
(7) the debtor did not receive a degree from the institution or the institution closed;
(8) the debtor owes less than $5,000; or
(9) the debtor has been repaying their student loans for more than 25 years. 

Our proposal will not solve every problem, but it would go a long way towards resolving many of the grosser inequities currently associated with student loans and their treatment in bankruptcy. 

 

Senators introduce consumer online privacy bill

Senators Mark Warner (D-VA) and Deb Fischer (R-NE) have introduced a bill to prohibit large online platforms from using deceptive user interfaces, known as “dark patterns,” to trick consumers into handing over their personal data.

Dark patterns refers to online interfaces in websites and apps designed to intentionally manipulate users into taking actions they would otherwise not take under normal circumstances. These design tactics, drawn from extensive behavioral psychology research, are frequently used by social media platforms to mislead consumers into agreeing to settings and practices advantageous to the company.

The bill is here. The Senators' press release is here (or here).

FTC acts against Genuix "cognitive improvement" supplements

Twelve corporate and four individual defendants have settled Federal Trade Commission charges that they deceptively marketed “cognitive improvement” supplements using sham news websites containing false and unsubstantiated efficacy claims, references to non-existent clinical studies, and fraudulent consumer and celebrity endorsements.

The FTC also alleged that the defendants used affiliate marketers to make deceptive claims about their products, which they sold using different names, including Geniux, Xcel, EVO, and Ion-Z. The settlements ban the defendants from engaging in this conduct.

The FTC's press statement, with links to the complaint and settlements, is here.