Consumer Law & Policy Blog

Coordinators

  • Allison Zieve
    Public Citizen Litigation Group
  • Jeff Sovern
    St. John's University School of Law
  • Brian Wolfman
    Georgetown University Law Center and Harvard Law School

Other Contributors

  • Richard Alderman
    University of Houston Law Center
  • Paul Bland
    Public Justice
  • Stephen Gardner
    Consultant
  • Mike Landis
    US Public Interest Research Group
  • Paul Alan Levy
    Public Citizen Litigation Group
  • Scott Nelson
    Public Citizen Litigation Group
  • Ira Rheingold
    National Association of Consumer Advocates
  • Jon Sheldon
    National Consumer Law Center

About Us

www.clpblog.org

The contributors to the Consumer Law & Policy blog are lawyers and law professors who practice, teach, or write about consumer law and policy. The blog is hosted by Public Citizen Litigation Group, but the views expressed here are solely those of the individual contributors (and don't necessarily reflect the views of institutions with which they are affiliated). To view the blog's policies, please click here.

Blogs On Consumer Issues

  • Alabama Consumer Law Blog
  • Arnold & Porter Consumer Advertising Law Blog
  • CAFA Law Blog
  • Caveat Emptor
  • Citizen Vox
  • Consumer Affairs with Sheryl Harris
  • THE CONSUMERIST
  • Credit Slips
  • Home Equity Theft Reporter
  • Fair Arbitration NOW Blog
  • UCL Practitioner
  • U.S. PIRG Consumer Blog

Other Interesting Legal Blogs

  • American Constitution Society Blog
  • Balkinization
  • Concurring Opinions
  • The Conglomerate
  • Electronic Frontier Foundation DeepLinks
  • Empirical Legal Studies
  • How Appealing
  • Legal Theory Blog
  • Mass Tort Litigation Blog
  • Opinio Juris
  • PrawfsBlawg
  • Rebecca Tushnet's 43(B)log
  • SCOTUSblog
  • TortsProf Blog
  • Trademark Blog
  • Truth on the Market
  • The Volokh Conspiracy

Consumer Law & Policy Links

  • AAAP Foundation Litigation
  • American Collectors' Association
  • Americans for Financial Reform
  • American Tort Reform Association
  • American Association of Justice
  • Center for American Progress
  • Center for Justice and Democracy
  • Center for Responsible Lending
  • Center for Science in the Public Interest
  • Center for Study of Responsive Law
  • Consumer Action
  • Consumer Federation of America
  • Consumers Union
  • Electronic Frontier Foundation
  • Electronic Privacy Information Center
  • EU Consumer Policy Page
  • Fair Arbitration NOW
  • Federal Trade Commission
  • International Association of Consumer Law
  • National Association of Consumer Advocates
  • National Association of Consumer Bankruptcy Attorneys
  • National Community Reinvestment Coalition
  • National Consumer Law Center
  • Public Citizen
  • State PIRGs
  • Public Justice (formerly Trial Lawyers for Public Justice)
  • Treasury Department, Regulatory Reform Agenda
  • U.S. Chamber Legal Reform
  • U.S. Public Interest Research Group

« December 2020 | Main | February 2021 »

Sunday, January 31, 2021

CFPB's Durbin & Romeo article on the economics of debt collection, taking into account consumers' optimism about whether they will default

Erik Durbin and Charles J. Romeo, both of the Consumer Financial Protection Bureau, have written The Economics of Debt Collection, with Attention to the Issue of Salience of Collections at the Time Credit Is Granted, 16 Journal of Credit Risk (2020). Here is the abstract:

This paper considers the role of policies that protect consumers from aggressive debt collection tactics. In general, rational consumers will select credit contracts based not only on price but also on the lender’s practices in the case of default and might prefer a contract that offers higher interest rates but more lenient collection tactics. We consider a model in which consumers can be optimistic in that they underestimate, at the time they borrow, the chance of a negative income shock that could cause them to default. This mindset induces consumers to perceive the welfare associated with borrowing to be greater than it is and to place less weight on the lender’s collection practices, which may cause them to prefer lower interest rate contracts even if they are accompanied by high collection effort in the event of default. We report supporting evidence that is consistent with consumers being optimistic when they borrow. We develop a two-period model of consumer borrowing that incorporates debt collection: consumers borrow in the first period, and repay, settle or default in the second. We show in both partial and general equilibrium settings that a restriction on debt collection effort can be welfare improving under some conditions. The restriction operates by reducing the gap between perceived and actual consumer welfare for optimistic consumers.

Posted by Jeff Sovern on Sunday, January 31, 2021 at 01:19 PM in Consumer Law Scholarship, Debt Collection | Permalink | Comments (0)

NY Times interviews a scam caller

by Jeff Sovern

Here. Both written and audio versions of the article are available. The article also reports on scam call centers overseas. I hope this is something the Biden administration moves on aggressively in its foreign policy.

Posted by Jeff Sovern on Sunday, January 31, 2021 at 01:03 PM | Permalink | Comments (0)

Sunday, January 24, 2021

My new article: Six Scandals: Why We Need Consumer Protection Laws Instead of Just Markets

by Jeff Sovern

My new article is now up on SSRN: Six Scandals: Why We Need Consumer Protection Laws Instead of Just Markets. Here' is the abstract:

Markets are powerful mechanisms for serving consumers. Some critics of regulation have suggested that markets also provide consumer protection: for example, Nobel Prize-winning economist Milton Friedman said “Consumers don’t have to be hemmed in by rules and regulations. They’re protected by the market itself.” This article tests the claim that the market provides consumer protection by examining several recent incidents in which companies mistreated consumers and then exploring how the companies’ sales to consumers fared. The issue also has normative implications because if markets consistently protected consumers, society would need fewer regulations and regulators, as Friedman suggested.

The article finds a more nuanced situation than Friedman and other critics theorized. In three--possibly four--instances, businesses’ sales actually increased after their misconduct became public, despite the fact that, in at least two cases, consumers had told pollsters they would avoid patronizing the company. In two or perhaps three cases discussed in the article, companies suffered declines in sales after their misbehavior became public, and it seems likely that a scandal was at least partly the cause. In those latter cases, the scandal became known only because of laws and those who enforce them, suggesting that it is the very rules that Friedman decried that led to a market response. In other words, laws helped the market achieve a better outcome by enabling consumers to learn of information that they wished to take into account in making purchasing decisions. Though it is impossible to know what would have happened if the problematic conduct had not occurred, the evidence suggests that markets alone are often not enough to protect consumers, or at least that markets are not a reliable consumer protection mechanism. Indeed, in five of the six scandals discussed in the paper, the strong likelihood is that in the absence of rules, regulators, and consumer attorneys, injured consumers would not have been compensated and the troublesome conduct would not have elicited a response that deterred future misconduct. It thus appears that rules and those who enforce them are sometimes the only source of consumer protection.

The Article also offers hypotheses for when consumers will and will not avoid a company that has misbehaved. Factors that may affect consumer response to misconduct include how the choice to patronize the company is presented to consumers; how difficult it is to switch to other providers (e.g., the cost of switching from one bank to another); whether the company has presented itself as catering to consumer values but failed to deliver; and how many consumers are affected.

Posted by Jeff Sovern on Sunday, January 24, 2021 at 01:49 PM in Consumer Law Scholarship | Permalink | Comments (1)

Saturday, January 23, 2021

Arbel & Becher paper: Contracts in the Age of Smart Readers

Yonathan A. Arbel of Alabama and Shmuel I. Becher of Victoria University of Wellington have written Contracts in the Age of Smart Readers. Here's the abstract:

What does it mean to have machines that can read, explain, and evaluate contracts? Recent advances in machine learning have led to a fundamental breakthrough in machine language models, auguring a profound shift in the ability of machines to process text. Such a shift has far-reaching consequences for contract and consumer law, where information barriers have long been the driving force behind a large body of regulation. Our object here is to provide a general framework for evaluating the legal and policy implications of using language models as ‘Smart Readers’—tools that read, analyze, and assess contracts.


Synthesizing state of the art developments, we identify four core capabilities of smart readers. Based on real-world examples produced by new machine-learning models, we demonstrate that smart readers can: (1) simplify complex legal language; (2) personalize the contractual presentation to the user’s specific socio-cultural identity; (3) interpret the meaning of contractual terms; and (4) benchmark and rank contracts based on their quality.


Nevertheless, the implications of smart readers are more complex than initially meets the eye. While smart readers can overcome traditional information barriers and empower parties, they rely on black-box models that sophisticated parties can exploit. Smart readers can close some of the gaps in access to justice, but they also introduce concerns about contractual bias and discrimination. While smart readers can also improve term transparency, they might also lead judges and policymakers to relax their guard prematurely.


The current body of contract doctrine and scholarship is ill-equipped to deal with both the prospects and risks of smart reader technology. This Article narrows this gap. It maps the necessary theoretical, policy, and doctrinal adaptations to the age when machines can automate the reading of contracts.

 

Posted by Jeff Sovern on Saturday, January 23, 2021 at 08:56 PM in Consumer Law Scholarship | Permalink | Comments (0)

Friday, January 22, 2021

Biden Extends Federal Student Loan Moratorium

On Wednesday, just hours after being sworn in, President Biden ordered the Education Department to extend the current COVID-19 suspension of all federal student loan payments and interest until at least October 1st.

The CARES Act — Congress' third coronavirus relief bill, which passed in March 2020 — directed the Education Department to suspend payments, stop collections, and set interest rates to 0% on all federally held loans. Former President Trump later extended those measures until January 31, 2021. Biden's order will automatically extend these measures for at least eight months. Borrowers will have no obligation to make payments, loans will not accrue interest, and the Education Department will stop collections on the one in five student borrowers who were in default even before the COVID-19 crisis. The student loan suspension applies to federally-held student loans which, according to CNN, include about 85% of total federal student loans, including direct federal loans and PLUS loans.

The move comes as Biden faces heavy pressure to cancel student loan debt altogether. Although Biden called for cancelling $10,000 in loans per borrower on the campaign trails, student loans were not included in the $1.9 trillion relief plan which the Biden team released last week. 

You can read the Education Department's announcement here and more about Biden's student loan suspension here.

Posted by Sejal Singh on Friday, January 22, 2021 at 01:55 PM | Permalink | Comments (0)

FTC Commissioner and CFPB Director-Nominee Rohit Chopra Discussing the FTC's Remedial Authority

by Jeff Sovern

If you are curious to learn more about FTC Commissioner and CFPB Director-Nominee Rohit Chopra, here is a video of him discussing the FTC's remedial authority a couple days before the Supreme Court heard oral argument earlier this month in AMG v. FTC. The event was hosted by Truth-in-Advertising.org (TINA.org).

Posted by Jeff Sovern on Friday, January 22, 2021 at 11:26 AM in Consumer Financial Protection Bureau, Federal Trade Commission | Permalink | Comments (0)

Thursday, January 21, 2021

District Court Denies Request for Injunction Compelling Amazon to Host Parler

by Paul Alan Levy

In a decision issued his afternoon, Judge Barbara Rothstein has denied a motion by the infamous web site Parler seeking a preliminary injunction compelling Amazon to reverse its decision to terminate its hosting of Parler's web site. The judge agreed with Amazon that, under its hosting contract, Parler was subject to suspension, and to termination without notice, if it allowed contents that are “illegal, that violate the rights of others, or that may be harmful to others,” including “content that is defamatory, obscene, abusive, invasive of privacy, or otherwise objectionable.” The judge noted further that Parler had never denied that content on its platform violated the terms to which it had agreed, and that, regardless of Parler’s claimed effort to improve its content moderation system, both at the time of its suspension, and during the litigation, Parler was demonstrably unable to implement moderation sufficient to protect the public from the dire consequences of its users’ violent rhetoric.

The judge rejected, on the merits, the conclusory allegation that Amazon was engaged in some sort of antitrust conspiracy with Twitter to disadvantage Parler as a competitor to Twitter. She thus did not reach (or even discuss) some of the broader (and disturbing) arguments in Amazon’s brief suggesting that section 230 could be a basis for denying antitrust claims based on the deliberate removal or obscuring of content with the (alleged) objective of harming competition.

Continue reading "District Court Denies Request for Injunction Compelling Amazon to Host Parler" »

Posted by Paul Levy on Thursday, January 21, 2021 at 06:38 PM | Permalink | Comments (0)

Biden names Dave Ueijo as CFPB acting director

President Biden has named Dave Ueijo, the chief strategy officer at the Consumer Financial Protection Bureau as the Bureau's acting director. Kate Berry's American Banker story here (may be behind paywall). Excerpt:

“He’s a great interim pick and he doesn’t regard the role as simply a caretaker," said [former CFPB Director Richard] Cordray. "He knows there are important things they need to be doing including focusing on the needs of people affected by the pandemic.”

* * *

Ueijo plans to focus on ways the CFPB can address racial and economic inequality.

“Black, Brown, and Native American communities in particular have borne a disproportionate share of the impacts of COVID,” Ueijo said in the memo [to CFPB staff].

Posted by Jeff Sovern on Thursday, January 21, 2021 at 03:09 PM in Consumer Financial Protection Bureau | Permalink | Comments (1)

Biden designates FTC Commissioner Rebecca Kelly Slaughter as Acting Chair

FTC release here.

Posted by Jeff Sovern on Thursday, January 21, 2021 at 02:22 PM in Federal Trade Commission | Permalink | Comments (0)

Bloomberg's Evan Weinberger Surveys Kraninger's Tenure as CFPB Director

Here. I think it's not behind a paywall.

Posted by Jeff Sovern on Thursday, January 21, 2021 at 10:38 AM in Consumer Financial Protection Bureau | Permalink | Comments (0)

Older »

Subscribe to CL&P

RSS/Atom Feed

To receive a daily email of Consumer Law & Policy content, enter your email address here:

Search CL&P Blog

Recent Posts

  • Consumer Federation of America is looking for a Communications Director
  • FTC: Not enough baby formula means plenty of scammers
  • Some comments on Alan Kaplinsky's comments on my comments
  • Attend a panel discussion on the FTC's monetary authority in the wake of the Supreme Court's AMG decision
  • Nielson Paper Asks What Happens If the FTC Becomes a Serious Rulemaker?
  • CFP: Symposium on AI, Consumer Credit, and Discrimination
  • CFP for Hybrid International Consumer Protection Law Conference
  • Virtual Conference: Multilevel Marketing: The Consumer Protection Challenge 2022
  • Watch Tower Drops Its Effort to Identify a Dissident Blogger Based on Spurious Copyright Claims
  • Whither Arbitration Regulation?
  • CLASS Network Directorship Position Deadline for Applications Extended to 5/22
  • Report: "Consumers Lured Into Predatory Car Repair Loans"
  • CFPB advisory opinion on coverage of fair lending laws
  • CFP: Beyond Fresh Start: Fixing the Broken Student Loan Default and Collection System
  • FTC says credit repair operation was a scam
  • CFPB orders Bank of America to pay $10 million penalty for illegal garnishments
  • En Banc Fifth Circuit "Express[es] No View" in CFPB v. All American Check Cashing
  • Why the CFPB is right that it can act against discrimination using its unfairness power
  • Dept of Education approves $238 million group discharge for 28,000 Marinello Schools of Beauty borrowers
  • FTC seeks comment on combatting tech-support scams and adding click-to-cancel requirements
  • Republicans complaining about lack of accountability of CFPB director who serves at the pleasure of the president
  • Biden considering options for forgiving federal student loan debt
  • The American retirement system is built for the rich
  • Forced arbitration backfires on Uber
  • Inaugural episode of Consumer Law and Economic Justice Podcast now available
  • Newsday essay calls for amending NY's UDAP law to give NY consumers the protections many red state consumers have
  • Study finds borrower race does not affect appraiser valuation
  • Some clothing retailers make more than half their income from their overpriced credit cards
  • Meirav Furth's important article: Retail Race Discrimination
  • John Oliver tackles consumer privacy
  • Lawyer who created use of arbitration clauses to prevent class actions doesn't read consumer contracts
  • "We don't talk about claims rates," in case you don't want to talk about something besides Bruno

Categories

  • Advertising
  • Arbitration
  • Auto Issues
  • Book & Movie Reviews
  • Books
  • CL&P Blog
  • CL&P Roundups
  • Class Actions
  • Conferences
  • Consumer Financial Protection Bureau
  • Consumer History
  • Consumer Law Scholarship
  • Consumer Legislative Policy
  • Consumer Litigation
  • Consumer Product Safety
  • Credit Cards
  • Credit Reporting & Discrimination
  • Debt Collection
  • Federal Trade Commission
  • Food and Nutrition
  • Foreclosure Crisis
  • Free Speech, Intellectual Property & Consumer Issues
  • Global Consumer Protection
  • Identity Theft
  • Internet Issues
  • Law & Economics
  • Other Debt and Credit Issues
  • Predatory Lending
  • Preemption
  • Privacy
  • Student Loans
  • Teaching Consumer Law
  • Television
  • U.S. Supreme Court
  • Unfair & Deceptive Acts & Practices (UDAP)
  • Web/Tech
  • Weblogs

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021

May 2022

Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31