Article on Standard Form Contracting on the Web

Shmuel I. Becher of the Peres Academic Center and Tal Zarsky of the University of Haifa - Faculty of Law have co-authored an article, "E-Contract Doctrine 2.0: Standard Form Contracting in the Age of Online User Participation." Here's the abstract:

The growing popularity of e-commerce transactions
revives the perennial question of consumer contract law: should
non-salient provisions of consumer standard form contracts be
enforced? With the focus presently on an ex-ante analysis,
scholars debate whether consumers can and should read
standardized terms at the time of contracting.

In today's information age, such a focus might be misguided...

FDIC Chair Proposes Solution to Mortgage Problem

Today's Times has an op-ed by Sheila C. Bair, chair of the FDIC, about the mortgage crisis.  Ms. Bair describes "poor lending standards and weak consumer protection [as] the root of the problem."  The solution, in her view, is for servicers to restructure all 2/28 and 3/27 subprime hybrid loans--that is, certain loans with initial low rates that reset to higher rates after two or three years--for borrowers who have "been making timely payments but can't afford the reset payments" as fixed rate loans at the starter rate.

Times Editorial on Lending Discrimination

by Jeff Sovern 

Today's Times has an editorial, "Subprime in Black and White," as a follow-up to the article earlier this week about the NYU Furman Center Study (that Brian Wolfman blogged about here) finding that neighborhoods with a majority of borrowers of color have a higher incidence of subprime loans than majority-white neighborhoods, even when they have similar median income levels.  Some excerpts:

Evidence is mounting that during the housing boom, black and Hispanic borrowers were far more likely to be steered into high-cost subprime loans than other borrowers, even after controlling for factors such as income, loan size and property location.

* * *

[T]he burden of proof has to be on the lenders to show that no discrimination has occurred. They have data on the risk characteristics of their borrowers. When the Federal Reserve began in 2004 to require lenders to provide specific data on subprime loans, the industry fought successfully to keep the risk profile of borrowers, including credit scores, under wraps. Now, with indications of discrimination rife, Congress must demand that data be fully disclosed.

* * * Whether there has . . . been widespread racial discrimination by lenders is a question that lawmakers must confront fully, without delay.

All Criticism of This Website Is Hereby Forbidden

by Greg Beck

Inventor-link is a company that promises to help inventors get their inventions to the marketplace. A link at the bottom of the company's home page leads to the site's "Privacy and User Agreement," which includes the the following terms:

By using this site you agree and understand that the HTML code, look, feel, content, company name, logo, text, and any likeness or derivative of such content is the sole property of Inventor-Link LLC and may not be used in any manner without the expressed written permission of Inventor-Link LLC. Furthermore, we strictly prohibit any links and or other unauthorized references to our web site without our permission.

With these terms, Inventor-link purports to prohibit visitors to the site from using the company's name, linking to the site, or even "refer[ring]" to it without permission. Although the enforceability of these terms is extremely dubious, the company is nevertheless invoking them in an attempt to stop criticism of the company that appears on InventorEd.org, a website that provides information about invention promotion businesses and scams.

Inventor-link is represented by Dozier Internet Law -- the same law firm that threatened to sue for copyright infringement if one of its demand letters were posted on the Internet. Once again, Dozier sent a strongly worded demand letter identifying a bunch of statements that it alleged to be defamatory, most of which appear to be statements of opinion. The letter goes on to invoke the website's user agreement:

The Alcoholic Beverage Industry’s Response to Underage Drinking: Add Stimulants

by Stephen Gardner

Capitalizing on the success of Red Bull in persuading bars to serve Red Bull as a mixer, Miller and Anheuser-Busch have decided to see Red Bull’s bid and raise the pot: They are selling ready-made concoctions of speed and alcohol —pre-mixed alcoholic beverages containing stimulants.[1]  Miller, Anheuser-Busch, and other smaller companies market these products in a way that is unfair and deceptive to consumers and that capitalizes on the popularity of energy drinks with youth – thereby marketing an alcoholic product to an underage population.

Alcospeed beverages are of unique concern — worse than just beer or just energy drinks. The special harm to consumers is twofold:

·              There are not enough studies to ensure the safety of – and much anecdotal evidence on the negative bodily effects of – consuming stimulants and alcohol together.

·                    There is a physiological effect – and marketing message – that consuming alcohol and caffeine together allows one to drink more alcohol and to feel less intoxicated.

This second effect may lead drinkers to engage in risky behavior such as driving, because they do not feel drunk. A recent study on the interaction between alcohol and energy drinks found that stimulants did nothing to reduce alcohol’s negative effects on motor coordination skills and visual reaction times, but did reduce subjective perception of alcohol intoxication.[2]

Mortgage Lending and Race

This article in yesterday's New York Times describes a new data analysis by New York University's Furman Center for Real Estate & Urban Policy showing that home buyers in black and Hispanic neighborhoods are more likely than those in non-Hispanic white neighborhoods to get home mortgages on unfavorable lending terms.  According to the Times, "[t]he analysis showed that even when median income levels were comparable, home buyers in minority neighborhoods were more likely to get a loan from a subprime lender." The Furman Center's analysis is available here.

Another Company Sues Its Anonymous Online Critics

by Greg Beck

First it was Video Professor, now Quixtar (an affiliate of Amway) is suing anonymous Internet posters who made disparaging remarks about the company online. Hopefully, the judge will ensure that the anonymous posters have notice and an opportunity to respond before their identities are revealed.

Update: commenter ibofightback pointed out that Quixtar is supposedly going after a specific group of former employees who are under court order not to disparage the company. These former employees were apparently subject to a non-disparagement contract. According to the company's blog:

[W]e are seeking to support the legal system – and not attack First Amendment speech. Tough line to walk, but we’ll walk it. Because we believe in both principles.

It could very well be that some of these sites truly are spontaneous, just angry citizens independently voicing their opinions without direction from anyone else. We have no problem with those folks. We don’t want their money, we regret wasting their time and we will even offer to reimburse their costs.

The offer to reimburse costs of innocent defendants is certainly praiseworthy (assuming that it includes attorneys' fees), but reimbursing the formerly anonymous speakers cannot make up for their loss of anonymity. If Quixtar can sue to discover the identities of anonymous critics just to find out whether they may be violating a court order, it would create a serious chilling effect on further criticism. Moreover, the court order that is supposedly being violated appears to affect only four people. I would be interested in knowing why the company cannot pursue more limited discovery into whether those four people are violating the order without digging into the identities of other anonymous critics. I'd also be curious to know what measures will be taken to inform the anonymous critics of the subpoenas and give them an opportunity to object.

Those who receive subpoenas or notice from their ISP that they have been subpoenaed may want to consider contacting Public Citizen, the Electronic Frontier Foundation, or another lawyer who would consider defending the speaker's anonymity on a pro bono basis.

Update #2:  The complaint (available here) does not mention the court order. Instead, it targets bloggers and YouTube posters who "disaparag[ed] Quixtar, its products and prices" or who encouraged Quixtar's members (Quixtar calls them "Independent Business Owners," or "IBOs") to leave the Quixtar program. The complaint speculates  that these bloggers may have an interest in a competing multi-level marketing program. It alleges that the bloggers' disparagement tortiously interferes with the company's contracts with its existing IBOs and constitutes unfair competition.

However, some of the criticisms may be true or statements of opinion and thus may be protected First Amendment speech. The speech may be protected even if made by a competitor and, in any case, the company's blog appears to concede that some non-competitors may be swept up in the dragnet ("It could very well be that some of these sites truly are spontaneous").

[original story via Techdirt]

U.S. PIRG's Campus Counteroffensive Against Credit Card Marketers

U.S. PIRG's consumer blog has this informative post about PIRG's new program, just beginning on campuses across the nation, to counter credit card companies' aggressive marketing tactics to college students.  The campaign's logo and tag line -- "Free gifts now.  Huge fees later" -- appear to the left.

Dozier Reponds

Our post about Dozier Internet Law's cease-and-desist letter to a consumer-review site, which threatened a copyright infringement claim if the letter were posted on the Internet, generated a lot of commentary on this blog and around the blogosphere (see for example here, here, here, here, and here). John W. Dozier, the founder of the firm, has now posted a letter on his website responding to the controversy. The letter graciously grants the Internet permission to link to it ("Yes, you can link to this page."). 

How to Use the DMCA to Squelch Consumer Criticism

by Greg Beck

Public Citizen is currently defending the anonymous operator of the website PowermarkHomesSucks.com against a lawsuit by Powermark Homes, an Ohio homebuilding company that is criticized on the site. But although Powermark Homes's motion for an order to shut the site down is still pending in an Ohio court, the company has already succeeded in getting the site taken offline thanks to the Digital Millennium Copyright Act. The case serves as an unfortunate example of how companies can use the DMCA to squelch unwanted consumer criticism on the Internet.