Consumer Law & Policy Blog

Paper on algorithmic price discrimination and consumer protection

Mateusz Grochowski of the Max Planck Institute for Comparative and International Private Law; Yale Law School; Polish Academy of Sciences - Institute of Legal Studies; Agnieszka Jabłonowska of the University of Lodz - Faculty of Law and Administration; European University Institute - Department of Law (LAW); Francesca Lagioia of the European University Institute - Department of Law (LAW); University of Bologna - Research Center of History of Law, Philosophy and Sociology of Law, and Computer Science and Law (CIRSFID); and Giovanni Sartor of the European University Institute Law Department have written Algorithmic Price Discrimination and Consumer Protection. A Digital Arms Race?, Technology and Regulation 36 (2022), Special Issue: Should Data Drive Private Law?. Here is the abstract: 

Online market players are gradually gaining the capacity to adapt prices dynamically based on knowledge generated through vast amounts of data, so that, theoretically, every individual consumer can be charged the maximum price he or she is willing to pay. This has downsides for markets and society. European Union law insufficiently addresses these issues. Consumer-empowering technologies may help counter algorithmic price discrimination. We advocate for regulation to make the arms race between consumers and sellers more balanced by strengthening the digital tools available to consumer protection actors and to limit the battlefield by clarifying and refining the applicable rules and defining clearer categories of impermissible behaviours.

Former employee of short-term lender explains how it snared consumers in debt traps

New Mexico recently enacted a 36% rate cap on consumer loans. Among the remarks that motivated them to do so was the following:

Thank you Madam Chair, Members of the Committee. My name is Will Hancock and I’m a student at the University of New Mexico School of Law. I had the displeasure of working briefly for a short-term loan company in Albuquerque. I completed the training and left shortly thereafter because I felt I was actively ruining people’s lives through predatory practices.

While I was there I saw countless customers come in seeking to pay off their loans. Customers rarely paid off their loans because it was company policy to heavily suggest they refinance. Of course, we never used the word “refinance,” but rather dangled money in front of the customer’s face and asked them if they wanted to take it. “Well, how about you give me $20 and then I’ll give you $40 back.” Or the classic, “Oh, I see we can give you an extra $50 today, how does that sound?”

Many customers simply did not understand that this was refinancing.

I was trained to look through bank statements for a source of recurring income. I noticed that most of these “recurring incomes” were payments from the social security office.

I support this bill because I support helping the vulnerable. If public social safety nets are not going to help these people, then least we can do is stop private companies from exploiting their vulnerabilities and lack of financial literacy, at least at such extortionate rates.

Thanks to Karen Meyers for forwarding Mr. Hancock's statement to me.

 

Who wrote the Utah Va, Colo, privacy laws? The Markup says it was industry lobbyists

Here.  Excerpt:

Not just in Utah, but in Virginia and Washington, and Minnesota, tech companies have provided draft language that led to the introduction of industry-friendly privacy bills, according to legislators The Markup interviewed and previous reporting by Protocol. 

Big Tech funded nonprofits like TechNet, the State Privacy and Security Coalition, and the Internet Association have traveled from state to state encouraging legislators to “mirror” those industry-authored bills. TechNet representatives, for example, have testified or supplied written comments on privacy bills in at least 10 states since 2021, more than any other organization, according to our analysis of state legislative records.

* * *

While the tactics vary by state, the message and the asks are clear: Big Tech wants laws that prohibit consumers from bringing private lawsuits against companies who break the rules, that narrowly define what constitutes “selling” data, and that require consumers to opt out of data collection and tracking on every website they visit rather than honoring what is known as a global opt-out.

 

 

Hunt paper: The Failed Legal Case Against Student Debt Jubilee

John P. Hunt of UC-Davis has written The Failed Legal Case Against Student Debt Jubilee. Here is the abstract:

This paper reviews and rebuts the arguments presented to date that the Executive lacks authority to engage in mass student loan cancellation. Legality skeptics have presented no compelling argument that the relevant statutory text, which authorizes the Secretary of Education to “waive … or release .., any claim” is ambiguous. Without such a showing, all other arguments against the legality of jubilee fail.

CFPB Wins A Round Against CashCall

Earlier this week, the U.S. Court of Appeals for the Ninth Circuit gave the CFPB a major victory in its long-running fight against a payday lender that had sought to evade state usury limits and licensing laws by originating its loans through an entity owned by a member of a Native American tribe using agreements that it claimed were subject only to tribal law. The decision in CFPB v. CashCall rejected separation-of-powers challenges to the agency’s enforcement action, and took a pro-consumer view of the Consumer Financial Protection Act’s prohibition of deceptive acts or practices and the CFPB’s ability to secure penalties and restitution for violations of the Act. The unanimous decision (from a panel featuring two Trump appointees, one of who wrote the opinion) is likely to significantly bolster the CFPB’s enforcement efforts, both generally and as applied to similar lending operations.

Report: "Vets, Servicemembers Harmed by TAB Bank and EasyPay Finance’s Predatory Loans"

The lending practices of EasyPay Finance and Utah-based Transportation Alliance Bank (TAB Bank) are hurting military servicemembers, veterans, and their families, according to a new report from a coalition of consumer advocacy groups released in advance of Memorial Day. The report is here.

FTC Calls for Research Presentations for PrivacyCon 2022

The Federal Trade Commission has issued a call for research presentations on a wide range of privacy and data security topics such as commercial surveillance and automated decision making for its annual PrivacyCon event, which will take place virtually on November 1, 2022.

PrivacyCon 2022 will bring together a diverse group of stakeholders to discuss the latest research and trends related to consumer privacy and data security. As part of this event, the FTC is seeking empirical research and demonstrations,including rigorous economic analyses, on such topics as:

• Algorithmic bias and ensuring fairness in the use of algorithms;
• Commercial surveillance including workplace monitoring, surveillance advertising, and biometric surveillance;
• Potential new remedies and approaches to improve privacy and security practices such as the deletion of algorithms or other products developed using data illegally collected from consumers; and
• Children’s and teen’s privacy risks, harms, and vulnerabilities, particularly those presented by emerging technologies.

More details on other topics and information on how to submit presentations can be found in the Call for Presentations. The deadline for submitting a presentation for PrivacyCon is July 29, 2022.

The event is free, open to the public, and will be webcast on the FTC’s website at www.ftc.gov. The agenda will be posted to the event page prior to the event.

Arbitration win for consumer plaintiff in the Supreme Court

A consumer plaintiff notched a rare Supreme Court win in a Federal Arbitration Act decision this morning, Morgan v. Sundance Inc.

The first three paragraphs of Justice Kagan's unanimous opinion sum things up nicely:

When a party who has agreed to arbitrate a dispute instead brings a lawsuit, the Federal Arbitration Act (FAA) entitles the defendant to file an application to stay the litigation. See 9 U. S. C. §3. But defendants do not always seek that relief right away. Sometimes, they engage in months, or even years, of litigation—filing motions to dismiss, answering complaints, and discussing settlement—before deciding they would fare better in arbitration. When that happens, the court faces a question: Has the defendant’s request to switch to arbitration come too late?

Most Courts of Appeals have answered that question by applying a rule of waiver specific to the arbitration context. Usually, a federal court deciding whether a litigant has waived a right does not ask if its actions caused harm. But when the right concerns arbitration, courts have held, a finding of harm is essential: A party can waive its arbitration right by litigating only when its conduct has prejudiced the other side. That special rule, the courts say, derives from the FAA’s “policy favoring arbitration.”

We granted certiorari to decide whether the FAA authorizes federal courts to create such an arbitration-specific procedural rule. We hold it does not. 

Congrats to Public Justice lawyer Karla Gilbride, the lead lawyer for the winning plaintiff.

American Banker: "CFPB's latest existential threat: Legal challenges to its funding "

The American Banker reports: "The Consumer Financial Protection Bureau again faces an existential threat in the courts — this time over whether the agency’s funding by the Federal Reserve System is constitutional. Earlier this month, five judges on the U.S. Court of Appeals for the Fifth Circuit signaled their view that the CFPB’s funding mechanism violates the Constitution’s separation of powers because it happens outside of the congressional appropriations process. The opinion is not binding, and the five judges represent less than a third of the 17 active judges on the Fifth Circuit Court of Appeals. Still, a decision by the Second Circuit Court of Appeals in another legal challenge to the CFPB’s finding source is expected in the next six months."

The full article is here. (Subscription required.)

Consumer Federation of America is looking for a Communications Director

CFA has posted this job announcement: The Consumer Federation of America, one of the nation’s leading nonprofit consumer advocacy organizations, is seeking an energetic, proactive person to be Communications Director. This person will be responsible for leading, developing, and overseeing CFA’s communications strategic plan to advance the advocacy policy agenda and promote the programmatic work of America Saves. This work includes development of an editorial calendar, website and social media management, support of advocacy efforts, and efforts to coordinate communications efforts across CFA and America Saves.

Read the full announcement, here.