The CFPB launches interactive website on mortgage data

The Consumer Financial Protection Bureau (CFPB) has just launched this website filled with data provided by financial institutions under the Home Mortgage Disclosure Act (HMDA), which requires those institutions to report and publicly disclose information about mortgages. HMDA became law in 1975 and is implemented through Regulation C. In 2009, the Dodd-Frank financial reform legislation transferred HMDA rulemaking authority from the Federal Reserve Board to the CFPB, effective in July 2011. As the CFPB explains, HMDA data is "important because they help show whether lenders are serving the housing needs of their communities; they give public officials information that helps them make decisions and policies; and they shed light on lending patterns that could be discriminatory."

The new CFPB website allows visitors to scroll over a map of the U.S. and use drop-down menus to get information on mortgage applications and originations for every U.S. county. Consumers can obtain aggregate figures or limit the data by loan purpose (home purchase, home improvement, or refinancing). You can view changes in applications and originations for each county over the last three years.

The effect of American Express and AT&T v. Concepcion on employment rights

After the Supreme Court's rulings in American Express v. Italian Colors and AT&T Mobility v. Concepcion, why wouldn't an employer, whenever possible, force its employees into individual arbitrations over employment disputes through adhesive arbitration clauses? At least, those rulings generally should allow private, non-unionized employers to avoid class dispute resolution (whether in court or before an arbitrator) when they want to. If you want to read about that topic, take a look at "Procedure, Substance, and Power: Collective Litigation and Arbitration of Employment Rights" by law professor Katherine Stone. Here is the abstract:

In this contribution to the Symposium honoring Stephen Yeazell, the author explores the interaction between group litigation and social context in the contemporary setting. She traces recent developments in the law of class action waivers coupled with mandatory individual arbitration clauses in consumer and employment contracts. She shows how the Supreme Court’s decisions in AT&T v. Concepcion and American Express v. Italian Colors enable large corporations that impose class action bans on consumers and employees to achieve de facto immunity from decades of hard-won protective legislation. She concludes that Yeazell’s insight — that the availability of group litigation is intricately linked with a society’s social arrangements — is as true today as it was when he first examined the issue in the 1970s.

A Pair of Privacy Papers: Big Data

Michael Birnhack of Tel Aviv University has written S-M-L-XL Data:  Big Data as a New Informational Privacy Paradigm. Here's the abstract:

Can informational privacy law survive Big Data? A few scholars have pointed to the inadequacy of the current legal framework to Big Data, especially the collapse of notice and consent, the principles of data minimization and data specification. These are first steps, but more is needed. To better understand the informational privacy implications of Big Data, this short comment locates Big Data as the newest point on a continuum of Small-Medium-Large-Extra Large data situations. This path indicates that Big Data is not just "more of the same", but a new informational paradigm.

One suggestion is to conceptualize Big Data in terms of property: Perhaps data subjects should have a property right in their data, so that when others process it, subjects can share the wealth. However, privacy has a complex relationship with property. Lawrence Lessig's 1999 proposal to propertize personal data, was criticized: instead of more protection, said the critics, there will be more commodification. Does Big Data render property once again a viable option to save our privacy? I begin a query about the property/privacy relationship, by juxtaposing informational privacy with property, real and intangible, namely copyright. This path indicates that current property law is unfit to address Big Data.

Meanwhile, OMER TENE of the College of Management - School of Law, Israel and JULES POLONETSKY, of the Future of Privacy Forum have co-authored Judged by the Tin Man: Individual Rights in the Age of Big Data, forthcoming in the Journal of Telecommunications and High Technology Law.  Here's their abstract:

Big data, the enhanced ability to collect, store and analyze previously unimaginable quantities of data in tremendous speed and with negligible costs, delivers immense benefits in marketing efficiency, healthcare, environmental protection, national security and more.  While some privacy advocates may dispute the merits of sophisticated behavioral marketing practices or debate the usefulness of certain data sets to efforts to identify potential terrorists, few remain indifferent to the transformative value of big data analysis for government, science and society at large.  At the same time, even big data evangelists should recognize the potentially ominous social ramifications of a surveillance society governed by heartless algorithmic machines. 

In this essay, we present some of the privacy and non-privacy risks of big data as well as directions for potential solutions. In a previous paper, we argued that the central tenets of the current privacy framework, the principles of data minimization and purpose limitation, are severely strained by the big data technological and business reality.  Here, we assess some of the other problems raised by pervasive big data analysis. In their book, “A Legal Theory for Autonomous Artificial Agents,” Samir Chopra and Larry White note that “as we increasingly interact with these artificial agents in unsupervised settings, with no human mediators, their seeming autonomy and increasingly sophisticated functionality and behavior, raises legal and philosophical questions.”  In this article we argue that the focus on the machine is a distraction from the debate surrounding data driven ethical dilemmas, such as privacy, fairness and discrimination. The machine may exacerbate, enable, or simply draw attention to the ethical challenges, but it is humans who must be held accountable. Instead of vilifying machine-based data analysis and imposing heavy-handed regulation, which in the process will undoubtedly curtail highly beneficial activities, policymakers should seek to devise agreed-upon guidelines for ethical data analysis and profiling. Such guidelines would address the use of legal and technical mechanisms to obfuscate data; criteria for calling out unethical, if not illegal, behavior; categories of privacy and non-privacy harms; and strategies for empowering individuals through access to data in intelligible form.

ACA Medicaid expansion now favored in most states

by Brian Wolfman

As we've reported in the past (for instance, here), states with governors and/or legislatures who don't like the Affordable Care Act (ACA) have threatened not to participate in the Act's Medicaid expansion (which the Supreme Court said could not be forced on the states by Congress under the Constitution's "Spending Clause").

As from ideology, however, why shouldn't the states opt in? The federal government pays for all the expanded Medicaid benefits for the expansion's first two years and for at least 90% after that. And the ACA's Medicaid expansion is large, guaranteeing health insurance to nearly everyone with incomes up to 133% of the federal poverty level and, assuming full participation, adding about 21 million currently uninsured people nationwide to the Medicaid program.

And as it turns out, though many states are still refusing to participate, the trend is toward participation. As Sarah Kliff reports, a majority of the states have now agreed to the expansion. That includes Pennsylvania and its Republican Governor Tom Corbett. And Michigan's Republican governor, Rick Snyder, just signed Medicaid expansion legislation. And, back in February, even Florida Governor Rick Scott, an ardent ACA opponent, changed his mind and signed on to the expansion.

Watch for the trend to continue. Even some Obamacare haters know a good deal for their citizenries when they see it.

Braucher on Scams, Literature, and Behavioral Economics

Jean Braucher of Arizona haas written Scamming Considered as One of the Exact Sciences:  19th Century American Literature Foreshadows Insights of Behavioral Economics.  Here's the abstract:

Nineteenth century American literary masters Edgar Allen Poe, Herman Melville, and Mark Twain (with co-author Charles Dudley Warner) all examined scamming in their largely pre-regulatory time. These authors made two prescient observations of continuing importance: scammers carefully study their marks to find weaknesses to exploit with tricks and traps, and scammers’ subjective states of mind are often unfathomable behind masks in which they pose as legitimate and trustworthy. Furthermore, the moral hollowness of confidence men portrayed in 19th century literature provides a metaphor for contemporary businesses that exploit consumer misperceptions. The article argues that the humanities arrived much earlier at insights of behavioral economics recently used to develop consumer protection law, which now authorizes administrative regulation to prevent businesses from taking advantage of consumers’ lack of understanding. Literature thus provides a comparative perspective from which to evaluate and affirm the law’s new efforts to address scamming more effectively.

"The Credit Scoring Conundrum"

That's the name of this article by law professor Frank Pasquale. Here is the abstract:

A bad credit score may cost a borrower tens of thousands of dollars, but it is not clear how it is calculated. The formula is a trade secret, immune from scrutiny. Lenders are moving beyond scoring to “credit analytics,” which tracks a consumer’s every transaction. Buy generic products instead of branded ones, and you may find your credit card’s interest rate rising and its limit falling. This essay critiques automation in the consumer-facing side of the finance industry. Reputation systems are creating new (and largely invisible) disadvantaged groups, disfavored due to error or unfairness. You may be one of those affected, labeled in a database as “unreliable,” “high medical cost,” “declining income,” or some other derogatory term. Since it is nearly impossible to find out exactly how one has been categorized by data brokers and other information collectors, those disadvantaged by secret, automated processes can’t even organize for better treatment. This essay documents their plight, and how current law fails to help. I propose new principles to guide the Consumer Financial Protection Bureau, the Federal Trade Commission, and other regulators as they address the growth of unaccountable financial data sources.

Burritos with a Conscience

Chipotle is causing a stir with an evocative new video: A silent scarecrow working in a foodlike-substance factory grows dismayed by the treatment of animals while Fiona Apple croons a haunting reinterpretion of "Pure Imagination" from Charlie and the Chocolate Factory. Soon, the scarecrow has an epiphany. He strikes out on his own and opens a food stand that serves locally-sourced (and presumably sustainable and humane) food, which happens to look a bit like Chipotle's fare.

It's an understatement to call this video striking, coming from a fast-food company. It's really well done, even captivating.

It left me wondering what advocates for the values it promotes think about Chipotle's practices. The chain is trying to do things differently, but how is it doing? My sense is that there are serious questions whether local, sustainable, and humane agriculture can be practiced on a scale large enough to serve a major fast-food chain. Not to mention the pricing issues. Is Chipotle making breakthroughs?

Now let's assume the best about Chipotle's representations. It's rare to see a large company go after its competitors on the moral or social desirability of practices, as opposed to the quality of products. If that starts happening more often, it could have interesting implications for consumer protection and regulatory policy more generally. In theory, the market can solve some social problems without the need for government responses. If consumers have good key information and real choices, then they can bring about change by voting with their dollars. In practice, it's often difficult for consumers to get the information they need to make choices that align with their ethics. This is true even for consumers who care a great deal and put real effort into their choices. The model of change based on consumer choice looks more promising when large companies affirmatively compete on social values by exposing bad practices and promoting good ones. They have the information and the marketing budgets to make a difference -- and they can reach not only consumers who try to make ethical choices, but ones who aren't paying much attention.

One last twist: The video technically isn't an ad for Chipotle, but for a free video game. (Maybe one that promotes Chipotle, in another fast-food marketing innovation? I don't know.)

Hat tip to Matt Yglesias.

 

Nevada Federal Court Strikes Down Egregiously Unfair and Hidden Arbitration Clause

By Paul Bland

On Twitter: @PBlandBland

 

    In the wake of recent Supreme Court decisions, forced arbitration clauses are generally enforced unless a corporation sticks something particularly overreaching and unfair in its arbitration clause, or drafts an arbitration clause in an unusually stupid way.  A U.S. district court in Nevada just found that Zappos did both in its arbitration clause in a privacy/security breach class action, and in a thoughtful opinion refused to enforce Zappos’ arbitration clause.

     First, the unusually stupid part.  Most on-line retailers require consumers to click on a button saying that they agree to all the fine print terms and conditions (what Elizabeth Warren famously called “word barf”), which generally included forced arbitration clauses.  Zappos was lazier than the average bear, though, and as a result the court refused to enforce its arbitration clause. Zappos’ arbitration clause provided that “Accessing, browsing or otherwise using the site indicates your agreement to all the terms and conditions in this agreement, so please read this agreement carefully before proceeding.”  Go back and read that sentence again.  Really?  According to this, if I simply BROWSE on a website, look say at one paragraph of text, that means I’ve agreed to word barf buried in some link on some other page or some other part of the clause?

     Well, not so much, it turns out.  In this case, the federal district court held that the consumer plaintiffs had not agreed to an arbitration clause merely because the arbitration clause was on the defendants’ website.  The court noted that there was no evidence that the plaintiffs had actual knowledge of the arbitration clause (I suspect it would take someone with OCD, or perhaps a descendent of the Amazing Kreskin to have actual knowledge of the arbitration clause), and that there was not reasonable notice of the terms of the clause.  The court noted that the clause was inconspicuous and buried.

     In one striking passage, the court (quoting another recent case), remarked that “Very little is required to form a contract nowadays–but this alone does not suffice.”  More hopefully, the court stated that “the Internet has not changed the basic requirements of a contract, and there is no agreement where there is no acceptance, no meeting of the minds, and no manifestation of assent.”

     Now for the particularly overreaching and unfair part.  Zappos’ clause states, “We reserve the right to change this Site and these terms and conditions at any time.”  In keeping with a long line of cases from around the country, the court held that this rendered the arbitration clause “illusory,” because Zappos had the sole power to unilaterally change the terms at any time.

     It’s nice to see a court still paying attention to the idea that arbitration clauses, as much beloved as they are by the U.S. Supreme Court, still must meet certain extremely low minimums of fairness and consent.  This decision is plainly right, and in accord with a lot of other cases, but it’s still very welcome.

Essay on Supreme Court's Amex v. Italian Colors decision

In its June 20 decision in American Express Co. v. Italian Colors Restaurant, the Supreme Court held that the Federal Arbitration Act requires enforcement of a class-action ban in an arbitration clause even if forcing the plaintiff to aribtrate individually would make it economically impossible for the plaintiff to vindicate its rights under federal law (in that case, rights under the federal antitrust laws). In  this essay, law professor Linda Mullenix reviews the key propositions established in Italian Colors and describes the Second Circuit's August 9 ruling in Sutherland v. Ernst & Young, which applied the Supreme Court's holding to a suit under the federal Fair Labor Standards Act.

9th Circuit: Google violated federal Wiretap Act when it collected unencrypted wi-fi data while capturing "Street View" photographs

In Joffe v. Google, Inc., the Ninth Circuit held this yesterday:

In the course of capturing its Street View photographs, Google collected data from unencrypted Wi-Fi networks. Google publicly apologized, but plaintiffs brought suit under federal and state law, including the Wiretap Act, 18 U.S.C. § 2511. Google argues that its data collection did not violate the Act because data transmitted over a Wi-Fi network is an “electronic communication” that is “readily accessible to the general public” and exempt under the Act. 18 U.S.C. § 2511(2)(g)(i). The district court rejected Google’s argument. In re Google Inc. St. View Elec. Commc’n Litig., 794 F. Supp. 2d 1067, 1073–84 (N.D. Cal. 2011). We affirm.

Here's a bit more from the 9th circuit's "plain English" summary:

The panel held that Google’s data collection did not fall within a Wiretap exemption set forth in 18 U.S.C. § 2511(2)(g)(i) because data transmitted over a Wi-Fi network is not an “electronic communication” that is “readily accessible to the general public.” Under 18 U.S.C. § 2510(16)(A), a “radio communication” is by definition “readily accessible to the general public” so long as it is not scrambled or encrypted. The panel held that the Wi-Fi network data collected by Google was not a radio communication, and thus was not by definition readily accessible to the general public. The panel also held that data transmitted over a Wi-Fi network is not readily accessible to the general public under the ordinary meaning of the phrase as it is used in § 2511(2)(g)(i). Accordingly, the district court did not err in denying the motion to dismiss on the basis of the Wiretap Act exemption for electronic communication that is readily accessible to the general public.