CL&P Blog

Kreiczer-Levy article on the duties of online marketplaces

Shelly Kreiczer-Levy of Ramat Gan College of Law & Business; Global Affiliated Faculty, The Vulnerability and Human Condition Program, Emory Law School has written The Duties of Online Marketplaces 58 San Diego Law Review (2021). Here's the abstract:

Is Amazon a seller for the purpose of product liability law? Is it obligated to stop price gouging by its sellers in the midst of the Covid-19 pandemic? Is Airbnb responsible for discrimination practiced by its users? These legal issues are discussed separately, and courts are typically divided into two camps. Some courts force platforms into unfitting categories such as a seller, a hotel chain or an employer in order to establish liability; others exempt platforms from liability altogether. This Article argues we need to think of these legal duties holistically, and suggests a new legal category: the market-constituting platform. Certain online platforms constitute a market: they create the infrastructure for the activity, the mechanism for closing a deal, the code of acceptable behavior, and the rules of participation in this activity. The challenge to legal thought and practice is to properly conceptualize the legal role of market-constituting actors and the duties that this role entails. This novel legal category has broad implications in different legal areas, including antidiscrimination law, tort law, and consumer protection.

Peacock Terms of Use include arbitration clause and cake recipe

by Jeff Sovern

Here. Which one do you think consumers are more likely to read? To understand? (HT: ContractsProf Blog)

Quarantine activity: Spend an hour reading Microsoft's Terms of Service. But you still wouldn't have read it all.

According to the Visual Capitalist, it would take an hour, three minutes, and thirty seconds to read the Microsoft TOS. The web site compares the length of various TOS for popular web sites.

Luguri & Strahilevitz paper on how online companies manipulate consumers using dark patterns--and UDAP laws

Jamie Luguri and Lior Strahilevitz, both of Chicago, have written Shining a Light on Dark Patterns. Here is the abstract:

Dark patterns are user interfaces whose designers knowingly confuse users, make it difficult for users to express their actual preferences, or manipulate users into taking certain actions. They typically exploit cognitive biases and prompt online consumers to purchase goods and services that they do not want, or to reveal personal information they would prefer not to disclose. Research by computer scientists suggests that dark patterns have proliferated in recent years, but there is no scholarship that examines dark patterns’ effectiveness in bending consumers to their designers’ will. This article provides the first public evidence of the power of dark patterns. It discusses the results of the authors’ large-scale experiment in which a representative sample of American consumers were randomly assigned to a control group, a group that was exposed to mild dark patterns, or a group that was exposed to aggressive dark patterns. All groups were told they had been automatically enrolled in an identity theft protection plan, and the experimental manipulation varied what acts were necessary for consumers to decline the plan. Users in the mild dark pattern condition were more than twice as likely to remain enrolled as those assigned to the control group, and users in the aggressive dark pattern condition were almost four times as likely to remain enrolled in the program. There were two other striking findings. First, whereas aggressive dark patterns generated a powerful backlash among consumers, mild dark patterns did not – suggesting that firms employing them generate substantial profits. Second, less educated subjects were significantly more susceptible to mild dark patterns than their well-educated counterparts. Both findings suggest that there is a particularly powerful case for legal interventions to curtail the use of mild dark patterns.

The article concludes by examining legal frameworks for ameliorating the dark patterns problem. Many dark patterns appear to violate federal and state laws restricting the use of unfair and deceptive practices in trade. Moreover, in those instances where consumers enter into contracts after being exposed to dark patterns, their consent could be deemed voidable under contract law principles. The article proposes a quantitative bright-line rule for identifying impermissible dark patterns. Dark patterns are presumably proliferating because firms’ secret and proprietary A-B testing has revealed them to be profit maximizing. We show how similar A-B testing can be used to identify those dark patterns that are so manipulative that they ought to be deemed unlawful.

Article on Designing Platforms--Like Uber, Airbnb--to Prevent Discrimination

Karen Levy and Solon Barocas of Cornell have written Designing Against Discrimination in Online Markets, 32 Berkeley Technology Law Journal (2018).  Here is the abstract:

Platforms that connect users to one another have flourished online in domains as diverse as transportation, employment, dating, and housing. When users interact on these platforms, their behavior may be influenced by preexisting biases, including tendencies to discriminate along the lines of race, gender, and other protected characteristics. In aggregate, such user behavior may result in systematic inequities in the treatment of different groups. While there is uncertainty about whether platforms bear legal liability for the discriminatory conduct of their users, platforms necessarily exercise a great deal of control over how users’ encounters are structured—including who is matched with whom for various forms of exchange, what information users have about one another during their interactions, and how indicators of reliability and reputation are made salient, among many other features. Platforms cannot divest themselves of this power; even choices made without explicit regard for discrimination can affect how vulnerable users are to bias. This Article analyzes ten categories of design and policy choices through which platforms may make themselves more or less conducive to discrimination by users. In so doing, it offers a comprehensive account of the complex ways platforms’ design choices might perpetuate, exacerbate, or alleviate discrimination in the contemporary economy.

New York Bank Ratings Index Created; Lets Consumers Rank Banks by Features They Care About

Ray Brescia of Albany, along with Albany alum Ralph Scunziano, the Empire Justice Center, and the Association for Neighborhood & Housing Development (ANHD) have created a New York Bank Ratings Index.  The web site is here; a report on the project here, and Ray also has a Medium op-ed titled Putting Consumer Protection in the Hands of the Consumer: New York’s New Bank Ratings Index. Here's the report's abstract:

New York State is one of the financial capitals of the world, and individual consumers of banking services have a wide range of commercial banks to choose from, all of which provide a dizzying array of products and services. With the details of many of these products and services buried in the fine print of consumer agreements or in the back pages of bank websites, the consumer is sometimes at a loss when choosing which bank to use as his or her primary bank when looking to open a checking account, use an ATM, send a remittance, or open a credit card account. The New York Bank Ranking Index (NYBRI) attempts to take some of the guesswork out of choosing a bank. It evaluates the nineteen largest banks in New York State by awarding points to each bank based on how well the banks meet consumer needs in twenty consumer-focused categories. In its current form, the NYBRI weighs each of these categories equally. The index then ranks the banks by giving a cumulative score under each category and lists them out highest to lowest. Consumers can also go to the accompanying website, to customize a ranking based on their own preferences in terms of the categories to use in scoring the banks and the relative weights to assign these categories. This report provides background information on the NYBRI, explains the process by which we completed the ranking and scoring for the nineteen largest banks serving individual bank customers in New York State, scores the banks and offers the final ranking, and then supplies the individualized data for each bank in an appendix. While we focus on New York State in this study, other jurisdictions can utilize the methodology used here for their own communities.

Ray adds: This initiative is totally transportable to other communities.  Happy to discuss with anyone the idea of doing that.

 

 

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Times: FCC Led by Trump Pick Starts to Reverse Obama Policies

Here (behind paywall). Net neutrality is in danger.

Guest Post by Norman I. Silber: Consumer Protection in a Trump Administration: The CPSC and the FCC

Earlier today, in an American Bar Association Antitrust Section webinar chaired by Harvey Saferstein, and with panelists Deborah Goldstein, Center for Responsible Lending, and Daniel D. Sokol, Professor of Law, University of Florida Levin College of Law, Hofstra's Norman I. Silber delivered the remarks that appear below about the Consumer Product Safety Commission and the Federal Communications Commission.  Norm has graciously consented to allow posting of his notes for his talk to the blog. He cautions that this was designed for verbal presentation and that he did not record his sources and therefore can’t footnote but indicated by quotations lines that are taken from others. He is grateful for conversations with many individuals who helped provide him information which he has privately acknowledged.

Weakening the Consumer Product Safety Commission.

As consumer affairs professionals know, the CPSC regulates the sale and manufacture of more than 15,000 different consumer product lines, from cribs to all-terrain vehicles. It fulfills its mission by banning dangerous consumer products, establishing safety requirements for other consumer products, issuing recalls of products already on the market, and researching potential hazards associated with consumer products.  Showcase recalls in the last few years, among hundreds of recalls, include the dangerous flaming Samsung Galaxy smartphones, exploding hover-boards, and IKEA bookcases that tip over. A number of consumer affairs professionals believe that the recall approach is a poor substitute for pre-market clearance and better inspection. The chief problem the Agency has faced is the glacial pace of rule-making, which has stalled rules that by most experts estimation can save many lives without imposing undue expense on consumers and businesses.

In 2008, in a show of strong consumer bipartisanship, connected to tragedies in connection with lead residues, the CPSC was granted extensive new regulatory authorities and mandates to improve consumer product safety through the Consumer Product Safety Improvement Act (CPSIA); new tools and building new capabilities, such as a new public information database and a world-class testing laboratory. Then Senator Obama took a leading role, but it was an accomplishment President Bush took pride in.

Among other things, the 2008 Safety Improvement Act upped the agency’s penalties for failing to comply with recall rules and for permitting unsafe products to enter the market rose to an aggregate limit of $15 million, with adjustments for inflation. Over the past two years, the CPSC has reached multimillion-dollar settlements under its elevated penalty authority.

Now comes the election. There is currently a Democratic majority but President Trump can remove Elliot F. Kaye as chair. But if he does he can’t turn around and appoint another chair because CPSC chairs must be confirmed by Senate and so the chair will remain vacant for some time; likely the commissioners will on their own vote one of two Republicans to be vice chair, and when Kaye is removed, a Republican vice chair will be acting chair. But there will be 3 Democrats until Oct 2017, when a Democratic majority is lost. At that point one can anticipate a de-emphasis on collecting all of the penalties already assessed, and perhaps more permissive attitude about consumer risk-taking.

Times Article on a Consumer Movement to Injure Breitbart, Fake News

Here (behind paywall).  Excerpt:

In mid-November, a Twitter group called Sleeping Giants became the hub of the new movement. The Giants and their followers have communicated with more than 1,000 companies and nonprofit groups whose ads appeared on Breitbart, and about 400 of those organizations have promised to remove the site from future ad buys.

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[A] a new consumer movement is rising, and activists believe that where votes failed, wallets may prevail. This struggle is about much more than ads on Breitbart News — it’s about using corporations as shields to protect vulnerable people from bullying and hate crimes.

Trump Transition Picks for FCC Said to be Opposed to Regulation, May Foreshadow Problems for Net Neutrality and TCPA Regulations

by Jeff Sovern

More from The Hill here.  Excerpt:

Trump has tapped tech experts Jeff Eisenach and Mark Jamison, two critics of net neutrality, to head his transition team for the Federal Communications Commission.

So far, Trump's appointments in consumer protection positions seem to oppose consumer protection.