Consumer Law & Policy Blog

Osofsky & Thomas paper on the relationship between implicit bias and the home mortgage interest deduction

Leigh Osofsky and Kathleen DeLaney Thomas, both of North Carolina, have written Implicit Legislative Bias: The Case of the Mortgage Interest Deduction, 56 UC Davis Law Review (2022). Here is the abstract:

The home mortgage interest deduction is over 100 years old. The deduction has been subject to increasing and, at times, withering criticism from commentators. Scholars have argued that the mortgage interest deduction may be a particularly ineffective and regressive way to subsidize homeownership. Other scholars have made the important point that the mortgage interest deduction has a disparate racial impact: homeowners are disproportionately white, so the deduction disproportionately benefits white people at the expense of people of color. Yet, the mortgage interest deduction has retained remarkable and costly staying power despite all the critiques.

How has the mortgage interest deduction persisted over a century, despite extensive critique? We argue that an underappreciated part of the story of the mortgage interest deduction is how its very creation arose out of implicit racial bias and other cognitive biases. First, scholars and policymakers ignored the racialized history of homeownership in the United States and relied on racist tropes in studying the potential economic benefits of the deduction. After such associations occurred, policymakers misattributed to homeownership benefits that were really, at least in part, benefits that flowed from whiteness. Perceiving positive benefits from homeownership, legislators viewed it as a good worth subsidizing through the tax system. Cognitive biases such as confirmation bias then made it unlikely that, once in place, the mortgage interest deduction would be substantially changed.

This understanding of the mortgage interest deduction should upset any future attempts to characterize the deduction as a neutral, albeit flawed, way to subsidize desirable values. More generally, this case study illustrates a phenomenon that merits more attention in the legal literature: how implicit racial bias and other cognitive biases in the legislative process make flawed legislation, like the mortgage interest deduction, more likely to be made and more difficult to upend. We conclude by offering suggestions for minimizing bias in future legislation and for reforming existing legal policy that already reflects such bias.

CFPB requests information regarding relationship banking and customer service

The Consumer Financial Protection Bureau is seeking public input on how bank customers can assert their rights to better customer service with big banks. A 2010 federal law specifies that consumers have rights to obtain timely responses to requests for information about their accounts from large depository institutions. In a Request for Information issued this week, the CFPB seeks data about, and consumer experiences with, the obstacles that may prevent people from receiving high standards of customer service and high-quality human interactions with their banks or credit unions. More information is here.

My Daughter’s @Delta Disaster Part 2

by Jeff Sovern

When last we left my daughter, she was in Atlanta, bagless, and Delta was clueless about where it was. On Sunday, she returned to the Atlanta airport for her return flight. Fortunately, checking in went faster than for her departure flight because she didn’t have a bag to check! She cleared security, only to learn that her flight home to LaGuardia had been cancelled. She desperately sought an alternate flight. Finally, a Delta employee found her a flight to Detroit. From there, she could get on a plane to the White Plains airport, and from there she could take a Lyft home, arriving home at 2 a.m., about five hours later than her originally-planned return. 

By the time her flight arrived in Detroit, she had only minutes to make it to the connecting flight. She ran to the gate, only to discover that the flight was overbooked by some twenty people. Delta offered people compensation to surrender their seats and postpone their flight until the next day, and finally my daughter got a seat. Of course, the fight was delayed by computer glitches. Meanwhile, the flight was still overbooked and so Delta kept raising its offer. Finally, my daughter decided that arriving the next day with compensation beat arriving home in the middle of the night. She took the offer, only to be stuck in the airport until 2 a.m. anyway while Delta attended to the logistics of booking her hotel room and flight back. She spent the rest of the night at an oddly-smelling airport motel, got on a flight the next afternoon (which was, naturally, overbooked and delayed by an hour), and arrived back at her home the following evening.  

Her bag remains lost, and she still hasn’t received the promised compensation, despite spending nearly an hour on the phone yesterday trying unsuccessfully to get it. Maybe they put it in her suitcase. But at least she no longer has to fly Delta. Until, of course the next time she flies a route that only Delta serves. Ah, the benefits of an oligopoly.  

My daughter's Delta Airlines disaster: what happened to her suitcase? @Delta

by Jeff Sovern

Thursday night, my daughter waved goodbye to her suitcase at LaGuardia as she flew to Atlanta for a wedding. She arrived in Atlanta at 10:30 pm, but her bag was a no show. She optimistically, but as it happened, pointlessly, stayed at the airport until 1:00 am at the advice of Delta employees, searching for the bag. The following morning she called Delta, spent almost an hour on hold, and was finally told the bag had been scanned into the airport on Friday! She raced to the airport, but in fact the person on the phone had misled her and the bag was not there. Now she faced her own private Mission Impossible: the wedding was only three hours away and Delta had wasted still more of the time she could have used to replace her wedding attire. She zoomed to a mall and made it to the wedding, but sadly missed the vows. Meanwhile, her bag is still missing, as of Saturday morning.

Even children of consumer law professors have consumer law problems. Even if they no longer have a suitcase.

Stories about people struggling with student loans

Here, from Business Insider. Painful reading, especially for those of us in education.

Another Unanimous Supreme Court Decision Goes Against a Company Seeking Arbitration

For the second time in the space of two weeks, the Supreme Court issued a narrow, but unanimous, decision against a company seeking arbitration. Today's decision in Southwest Airlines v. Saxon, like the one two weeks ago in Morgan v. Sundance, Inc., involved an employment arbitration agreement, not a consumer agreement. And the specific issue decided today, concerning the scope of the Federal Arbitration Act's exclusion of arbitration agreements involving transportation workers, arises only in employment cases, unlike the issue regarding waiver of arbitration decided in Morgan. But one important feature unites both cases: In both, the Supreme Court rejected the view that the FAA's "proarbitration purposes" provide a reason for courts to adopt special rules favoring arbitration when the statutory text does not provide for such favoritism. As the Court put it today, "we have no warrant to elevate vague invocations of statutory purpose over the words Congress chose." Similarly, in Morgan, the Court emphasized that "the FAA's 'policy favoring arbitration' does not authorize federal courts to invent special, arbitration-preferring procedural rules.'"

The Court's decisions under the FAA still give a lot of sway to arbitration agreements. But the decisions of the past two weeks show that the Court unanimously agrees that it can't just "make up" pro-arbitration rules, in the words of Justice Kagan's Morgan opinion.

(By the way, the holding in Saxon is that workers who help load and unload cargo from airplanes belong to a class of workers engaged in commerce within the meaning of the FAA's Section 1, which says that the Act does not apply to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." Saxon holds that workers whose typical duties directly involve them in transporting goods across state or international borders fall within the transportation-worker exception, and that loading and unloading interstate cargo is part of the interstate transportation of goods. The decision acknowledges that the "answer will not always be so plain" in other cases.) 

NACA Webinar: How to become a federal judge for consumer attorneys

Becoming a Federal Judge: What Consumer and Civil Justice Attorneys Need to Know   June 14, 3:00 p.m.–4:00 p.m. ET

Pricing

Members: no charge Nonmembers: no charge but must be approved (if you have not yet been approved to attend NACA webinars, you must email training@consumeradvocates.org to be vetted to attend)

The Biden administration has demonstrated a commitment to creating a diverse federal judiciary that includes attorneys from the civil justice community. If you have ever thought about being a federal judge (even if you believed you’d never be considered), please join us to learn why you—as a lawyer committed to civil and economic justice—are the type of attorney who can and should be nominated for a federal judgeship.

What You Will Learn

What the qualifications (and disqualifications) are for becoming a federal judge. How to build your resume to become a federal judge (spoiler: you may have already done so). How the judicial nomination process works, including how to apply to become a federal judge.

Speaker

Christopher Kang is the Co-founder and Chief Counsel of Demand Justice. He served in the White House for nearly seven years, as Deputy Counsel to President Obama and Special Assistant to the President for Legislative Affairs. Chris oversaw the selection, vetting, and confirmation of more than 220 of the president’s judicial nominees—who set records for the most people of color, women, and openly gay and lesbian judges appointed by a president. He also was in charge of advising President Obama on commutations and pardons from 2014 to 2015 and helped spearhead the confirmations of Supreme Court Justices Sotomayor and Kagan, the repeal of Don’t Ask Don’t Tell, and passage of the Fair Sentencing Act. Chris also has served as National Director of the National Council of Asian Pacific Americans and worked for Senate Democratic Whip Richard Durbin as Director of Floor Operations and Judiciary Committee Counsel. In 2011, the National Law Journal named him one of the top forty minority lawyers in the nation under the age of forty. Chris serves on the Board of Advisors of the American Constitution Society and the People’s Parity Project.

New report on scam robocalls

National Consumer Law Center and the Electronic Privacy and Information Center released a report describing the problem that 1 billion monthly scam robocalls create for U.S. telephone subscribers, the causes of the problem, and suggested resolutions to the problem. Here is the Executive Summary:

Every month, more than one billion scam robocalls designed to steal money from unsuspecting telephone subscribers are made possible because providers-–typically small, pop-up VoIP telephone providers—transmit these calls through to our telephones. Every answered scam robocall pays money to those providers, as well as to every telephone service provider in the call path.

Even when these providers are told—sometimes repeatedly—that they are transmitting fraudulent calls, they keep doing it, because they are making money from these calls. And even when they are caught and told to stop, they are not criminally prosecuted, and the fines that are levied are rarely collected. FCC Commissioner Geoffrey Starks has noted this counterproductive dynamic regarding robocalls: “[I]llegal robocalls will continue so long as those initiating and facilitating them can get away with and profit from it.”

This report explains the depth of the problem, the reasons for the problem, and how the Federal Communications Commission has responded. We recommend several simple strategies that would stop most, if not all, of these fraudulent robocalls.

You can read the report here.