Consumer Law & Policy Blog

Chris Peterson & Marshall Steinbaum Article on the Gig Economy, Consumer Protection, and Antitrust

Christopher Lewis Peterson of Utah Law and Marshall Steinbaum of Utah's Department of Economics have written Coercive Rideshare Practices: At the Intersection of Antitrust and Consumer Protection Law in the Gig Economy, University of Chicago Law Review, Forthcoming. Here's the abstract:

This article considers antitrust and consumer protection liability for coercive practices vis-à-vis drivers that are prevalent in the rideshare industry. Resale price maintenance, non-linear pay practices, withholding data, and conditioning data access on maintaining a minimum acceptance rate all curtail platform competition, sustaining a high-price, tacitly collusive equilibrium among the few incumbents. Moreover, concealing relevant trip data from drivers is both deceptive and unfair when the platforms are in full possession of the relevant facts. In the absence of these coercive practices, customers too would be better-off due to platform competition that would lower average prices by sharpening competition between incumbents, enable entry by rivals charging lower take rates, and unravel pervasive price discrimination. Coercive practices in the rideshare industry and elsewhere, and the business models they enable, result from the preference for hierarchy and domination inherent in the contraction of liability for vertical restraints since the 1970s.

Paper on the FTC's power to regulate discriminatory AI

Andrew D. Selbst of UCLA and Solon Barocas of Microsoft Research and Cornell have written Unfair Artificial Intelligence: How FTC Intervention Can Overcome the Limitations of Discrimination Law, 171 University of Pennsylvania Law Review __ (forthcoming). Here is the abstract:

The Federal Trade Commission has indicated that it intends to regulate discriminatory AI products and services. This is a welcome development, but its true significance has not been appreciated to date. This Article argues that the FTC’s flexible authority to regulate 'unfair and deceptive acts and practices' offers several distinct advantages over traditional discrimination law when applied to AI. The Commission can reach a wider range of commercial domains, a larger set of possible actors, a more diverse set of harms, and a broader set of business practices than are currently covered or recognized by discrimination law. For example, while most discrimination laws can address neither vendors that sell discriminatory software to decision-makers nor consumer products that work less well for certain demographic groups than others, the Commission could address both. The Commission’s investigative and enforcement powers can also overcome many of the practical and legal challenges that have limited plaintiffs’ ability to successfully seek remedies under discrimination law. The Article demonstrates that the FTC has the existing authority to address the harms of discriminatory AI and offers a method for the Commission to tackle the problem, based on its existing approach to data security.

FTC seeks public comment on advertising to kids in digital media

The Federal Trade Commission is seeking public comment on how children are affected by digital advertising and marketing messages that may blur the line between ads and entertainment. The FTC is seeking the input in conjunction with an October 19, 2022 event that will examine the topic.

More information is here.

"Actually, Canceling Student Debt Will Cut Inflation," by economist Joseph Stiglitz

Read Stiglitz's essay here.

The Search for Strategies to Reduce Medical Error and its relationship to tort law and regulation

In his essay The Search for Strategies to Reduce Medical Error, law prof Robert Rabin reviews Closing Death’s Door: Legal Innovations to End the Epidemic of Healthcare Harm, by Michael J. Saks and Stephan Landsman, which considers the policy strategies for reducing medical error. Rabin then places Saks and Landsman's work in the context of tort and regulatory perspectives on compensation and deterrence of medical harm.

My latest paper: Not-So-Smartphone Disclosures

by Jeff Sovern

I co-authored it with Nahal Heydari.  It's available here. And here's the abstract:

Consumers increasingly engage in financial transactions on smartphones, including obtaining loans. Lawmakers depend on mandatory disclosures to alert consumers when loan terms are excessive. When those disclosures are provided on the tiny screen of a mobile phone, can consumers decipher them? To answer that question, we surveyed 659 consumers, showing half of them standard credit card disclosures on a computer or laptop and half of them disclosures on a mobile phone, and using many of the same questions about the disclosures posed in a 2008 survey with the forms on paper. We found that consumers understood the disclosures significantly less well on smartphones, suggesting that predatory lenders would have an easier time persuading consumers to take out high-priced loans by offering them on mobile apps. Indeed, our respondents who saw the disclosures on smartphones failed to answer correctly nearly half the time.

Our study also indicates that many consumers cannot comprehend credit card disclosures whether they see them on a computer, a mobile phone, or, for that matter, on paper. More specifically, more than a third of the time, on average, consumers could not come up with the correct answer to questions about the forms. The problem is particularly acute for African-American and LatinX respondents, thus opening the door to reverse-redlining. Finally, we found that consumers have an easier time grasping disclosures of penalty fees, such as late fees—as to which charges are limited by federal law—than of penalty interest rates (e.g., higher interest rates assessed because a consumer fails to make timely payments) or non-penalty fees (e.g., cash advance fees)—as to which charges are not limited. Indeed, consumers were 36% more likely to answer questions correctly when asked about matters on which credit card issuers are barred from charging unreasonable fees than when they were asked about items as to which their ability to understand the disclosure was their only protection. These findings suggest that disclosure inadequately protects consumers and that lawmakers should consider imposing additional limits on credit card charges.

Maryland seeking applications for consumer law endowed faculty position

From the announcement:

The University of Maryland Francis King Carey School of Law invites applications for a newly endowed tenured or tenure-track faculty position in consumer law to begin July 1, 2023. For this position, we will consider junior- and senior-lateral candidates and experienced practitioners with demonstrated potential for outstanding teaching and original scholarship.

Qualifications

We are seeking a candidate who exhibits national leadership and distinction in consumer law and who has prior experience representing consumers and publishing scholarly articles concerning the interests of consumers in legal matters. The successful candidate will teach a consumer law course and will, on a reasonable basis, teach a first-year or large upper-level course in an area related to consumer law and protecting the rights of consumers (for example, civil procedure, contracts, torts, or commercial law). The University of Maryland has a strong commitment to diversity. We welcome applications from persons of color, people with disabilities, veterans, women, and other members of historically disadvantaged groups. Contact: Co-Chairs of the Appointments Committee, Professors Richard Boldt and Michael Pinard, University of Maryland Francis King Carey School of Law, 500 West Baltimore Street, Baltimore, MD 21201. Email:rboldt@law.umaryland.edu; mpinard@law.umaryland.edu.

FTC issues ANPR on consumer privacy and data security

More here.

Today at the CFPB

Two announcements today from the CFPB:

CFPB Warns that Digital Marketing Providers Must Comply with Federal Consumer Finance Protections

Today, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule laying out when digital marketing providers for financial firms must comply with federal consumer financial protection law.

CFPB Takes Action Against Hello Digit for Lying to Consumers About Its Automated Savings Algorithm

The Consumer Financial Protection Bureau (CFPB) is taking action against Hello Digit, LLC, a financial technology company that used a faulty algorithm that caused overdrafts and overdraft penalties for customers. Hello Digit was meant to save people money, but instead the company falsely guaranteed no overdrafts with its product, broke its promises to make amends on its mistakes, and pocketed a portion of the interest that should have gone to consumers.

Cal Chief Judge calls for stronger oversight of "private judging," after scandal involving JAMS

The LA Times has the story here (might be behind a paywall). More on the scandal here.