Jeffrey Davis Paper Compares US and Australian Credit-Granting Law

Jeffrey Davis of Florida has written Regulating for the First Time the Decision to Grant Consumer Credit: A Look at the First Steps Taken by the United States and Australia.  Here is the abstract:

In this Article, I discuss the changes in three consumer-credit realms. First, I compare the Australian regime applicable to all forms of consumer credit granting, including mortgage lending, to the American regulation of the consumer mortgage-granting decision. Second, I compare the Australian and American approaches to the decision to authorize use of, or increase the credit limit on, individual credit cards. Third, I compare the two approaches to regulating small short-term loans, usually called payday loans. Finally, I compare the enforcement regimes of both countries — perhaps the key to it all.

And here is a paragraph from the Introduction describing some of the differences in the two countries' treatment of consumer credit:

The Australian approach to regulating the decision to grant consumer credit differs systematically from that in the United States. First, Australia requires responsible credit granting in all forms of consumer credit, whereas the United States thus far constrains the decision only in the narrow realms of home mortgage lending, credit cards, and military payday loans. Second, the American concept of responsible consumer lending requires only an assessment of the debtor’s ability to pay, whereas the Australian concept requires a determination of whether the credit is "suitable," requiring not only an assessment of the consumer’s likely ability to pay, but also an inquiry into the consumer’s requirements and objectives in borrowing. Third, Australia requires anyone engaging in consumer credit activity to obtain a credit license. While most American states require licenses to engage in certain types of consumer credit, such as becoming a mortgage broker, there is no such general requirement in any state, and the federal government makes no such requirement at all. Fourth, Australia alone provides a process that is unique in the world for External Dispute Resolution that is cost-free to the consumer.

 

More Terms and Conditions Humor

From Pearls Before Swine.  (HT: ContractsProf Blog)

More on Debt Collection and Arbitration

by Jeff Sovern

Richard posted a link last week to the Times article about how debt collectors first sue in court and then when consumers sue them, use arbitration clauses to block the consumer law suit.  Today the Times published four letters responding to the article, including mine. I want to comment on two of the other letters. Joseph H. Weber wrote:

Class-action litigation is certainly not the answer. The only people who benefit from class-action litigation are the lawyers.

One problem with this assertion is that it overlooks that class actions deter misconduct.  To the extent that they do so, consumers of the product benefit even if they do not obtain redress themselves. Weber also wrote:

There are other options for people who believe they are being cheated by debt collectors in addition to arbitration, such as disputing the original claim in small claims court.

Except that consumers don't always know that they have been sued in the first place, as was reportedly true of the consumer described in the article's lead. It's hard to defend against a claim that you don't know about.

Another letter-writer, Eric Hodson, urged Congress to "pass legislation requiring that any consumer credit agreement include a prominent warning that the consumer will be confined to arbitration of any disputes, and that arbitration can be expensive and the outcomes usually favor the business over the consumer."

But our arbitration study found that consumers generally did not understand arbitration clauses and many did not think they could take away their right to sue.  In fact, considerable empirical evidence indicates that consumer disclosures are ineffective.  Perhaps it is possible to write an effective disclosure along the lines Hodson suggests, but no evidence suggests that it is, and a fair amount of empirical evidence suggests that it is not.

Health, risk, and the flu

This essay by David Ropeik (pictured to the right) explains that people often miscalculate health risks. Risk from flu (influenza) is far greater than from measles (particularly for certain age groups). Flu causes a lot of deaths and staggering economic costs, yet vaccination rates remain low. Get a flu shot.  

The 2-Year Law Education Fails to Take Off

As law school enrollment and job placement decreased, law schools considered many options to improve either or both. One proposal was a “two-year” law school, endorsed by President Obama. It was viewed as a quicker and cheaper alternative, and several schools began promoting their program. The plan was for students to go to school year round for two years, instead of three with substantial summer vacations. The cost of school was generally the same, but graduating a year early cut off one-year of living expenses and increased earnings by a year. 

The New York Times now reports the two-year law school has not been as successful as expected. Although most law schools have tried various methods of increasing student enrollment and job placement, the two-year plan has not been seen by potential students as a substantial advantage. Northwestern University, the only elite school to adopt it, has ended its accelerated program because it failed to attract enough applicants. While many argue law school is too long, students seem to recognize the value of three-years of legal education, and most schools are finding ways to make the law school experience more valuable, rather than trying to shorten it.

 

Important Seventh Circuit Discussion of Libel Injunctions

by Paul Alan Levy

Last week the Seventh Circuit addressed several recurring issues pertaining to libel law in McCarthy v. Fuller,  a case involving a falling out between by two sets of religious advocates pertaining to the holiness of certain alleged apparitions of the Virgin Mary.   (Choice characterization on Techdirt:  “The details of the actual case fall into the ‘somewhat nutty’ category, involving some religious stuff that we'll skip over as not relevant.”)  The court unanimously overturned an injunction granted in the case on the grounds that it was overbroad, although there was strenuous disagreement among the judges about whether a narrowed injunction could be granted on remand.

John Doe Company v. CFPB

Last week, the CFPB filed a motion in a D.C. federal district court seeking to unmask companies that sued the agency this past summer, in a case whose public filings bear the mysterious caption John Doe Company v. CFPB (No. 1:15-cv-1177, D.D.C.). The lawsuit was entirely under wraps until October, when the court unsealed the case but allowed the plaintiff companies to remain pseudonymous. By that time, the case had already ended.

Here's what we know about the case (all quotations from the court's October 16 opinion unsealing the case in part): In July, five companies "who provide services related to consumer credit counseling and [were then] under investigation" by the CFPB sued the CFPB because the agency was, as part of an investigation, conducting an interview with the companies' lawyer. The interview was voluntary, the lawyer was represented by a lawyer of his own, and there was no reason to suspect that lawyer would reveal any confidential information, but the companies nonetheless argued that they had a right to be present to protect their attorney-client information and accordingly that the CFPB violated the Administrative Procedure Act in denying them the opportunity to attend. The companies sought a TRO and also moved to litigate the case under seal, both of which the agency opposed. The court held a hearing on the TRO the day after the case was filed, while the case was still sealed.  "Events at the hearing largely mooted the case[.]" Accordingly, the companies voluntarily dismissed the case in August only two weeks after filing it. The court did not rule on the sealing motion until October, and it held that sealing was incompatible with the public's right to access court records. However, the court, taking a suggestion the companies made for the first time in their reply brief in support of sealing, decided that it would permit the companies to continue to conceal their identity.

California DMV proposes regulations for self-driving cars

As the NYT reported last week,

The D.M.V. proposal would mandate that autonomous vehicles be operated by a licensed driver who could take over if necessary. That driver would also be on the hook for traffic violations. The manufacturers of self-driving cars would have to subject their vehicles to a third-party safety test. And they would apply for three-year permits that would allow them to lease but not sell self-driving cars to the public.

The whole story is here.

Mall of America Gets Narrow TRO Barring Three Individuals' “Demonstration” Inside Its Structure, but No Order Against Avdocacy of a Demonstration

by Paul Alan Levy

In a case litigated over the past few days, the Mall of America filed an action against several leaders of Black Lives Matter in Minneapolis who had called a demonstration, to be held inside the famous shopping mall, to protest a police shooting in the area.  The TRO sought to bar the holding of the demonstration by four named defendants, by John Doe defendants, or by the voluntary association “Black Lives Matter Minneapolis,”  or by “all of their respective agents and other persons acting in active concert or participation with any of the defendants.”  In addition, the requested TRO would have barred any of the defendants or those “acting in active concert” from soliciting or encouraging a demonstration, including by online messages or through social media; would have required that existing messages be taken down; and would have required the affirmative posting of messages saying that the demonstration had been canceled.  As some of the defendants noted in a press release, “If the motion is approved by a judge, activists could face jail time for refusing to make social media posts or send texts in accordance with the demands of a private corporation.”

Will Bogdan Builders Seek an Injunction Against Criticism on a “Harassment” Theory?

by Paul Alan Levy

This morning I attended a hearing at the D.C. Board of Zoning Adjustment in a case relating to a neighborhood issue in which I have been engaged – an appeal by our local Advisory Neighborhood Commission of the issuance of a building permit that allows Bogdan Builders to “pop-up” a row house into a four-unit apartment building without providing the usually-required off-street parking for two cars, one for every two units.  Our neighborhood has been campaigning for a rezoning to prevent such developments.  Many of my neighbors are more concerned by the size of the new buildings, but for me, what worries me more is the loss of dwelling units big enough to raise children but close enough to downtown to be walkable.

After the hearing ended with a procedural victory for the developer, I spoke to him privately, mentioning the first of a series of gripe sites have been created created to discuss his actions in our neighborhood, and noting that even if he manages to get his building permits, the neighborhood will be picketing when his units go up for sale.  I suggested to him that he might be better served if he could find a way to sit down with his neighbors to find a compromise instead of standing on his existing rights under current zoning rules, lest the neighbors also stand on their First Amendment rights to protest his conduct. 

His lawyer told me that she would be filing for a TRO to prevent "harassment" of her client Bogdan Builders.  I have written a letter explaining to Ms. Mazo why her planned litigation cannot possibly succeed, as well as some of the adverse consequences that could follow from the bringing of such litigation.