Category Archives: Consumption / Consumer Protection

Op-Ed: “America’s poor subsidize wealthier consumers in a vicious income inequality cycle”

Op-Ed: Aaron Klein, America’s poor subsidize wealthier consumers in a vicious income inequality cycle, Brookings, Feb. 6, 2018.

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New Article: “Consumer Debt Collection in Massachusetts: Is Civil Gideon a Solution?”

New Article: Joel Tay, Consumer Debt Collection in Massachusetts: Is Civil Gideon a Solution?, 11 Harv. L & Pol’y Rev. S1 (2017).

News Coverage: “Shop Here, Not There: Science Says Reducing Inequality Is Almost That Simple”

News Coverage: Chris Winters, Shop Here, Not There: Science Says Reducing Inequality Is Almost That Simple, Yes Magazine, Nov. 20, 2017.

New Article: “The Food We Eat and the People Who Feed Us”

New Article: Stephen Lee, The Food We Eat and the People Who Feed Us, Wash. U. L. Rev. forthcoming 2017. Abstract below:

Food justice scholars and advocates have made a simple but important point: for all the attention we pay to the food we eat, we pay far too little attention to the people who feed us. But can law play a role in directing consumer attention to labor-related issues? Traditional food law paradigms provide at best incidental benefits to food workers because these types of laws typically rely on transparency and disclosure schemes that serve narrow consumer-centric interests. An increasing number of laws attempt to disseminate information about the working conditions of the people who pick, process, and produce our food so that consumers can also consider the ethical and moral consequences of their food choices. In assessing this attempt to rebrand labor enforcement in consumer protection terms, this Article does two things. First, this Article identifies the conditions under which such schemes are most likely to succeed. Regulators should target food markets characterized by relative consumer wealth, norm consensus regarding which outcomes are desirable, and an established intermediation infrastructure to give disclosure laws the best chances for improving labor conditions along the food chain. Even where these conditions exist, a second point this Article makes is that disclosure laws should supplement, not supplant, traditional labor enforcement strategies that rely on worker-initiated complaints. This is because certain values, like autonomy, equity, and community standing are best vindicated by the workers themselves instead of by others (like consumers) on their behalf. Crowding out workers from the enforcement process creates the risk of exacerbating the structural forms of inequality that define work across the food system.

New Article: “Racism in the Credit Card Industry”

New Article: Andrea Freeman, Racism in the Credit Card Industry, 95 North Carolina L. Rev. 1071 (2017).  Abstract below:

In a social and financial climate characterized by deep racial and socioeconomic divide, racism against credit card applicants and consumers is a core piece of the systemic inequality that perpetuates dramatic disparities in wealth, employment, health, and education. Over several decades, credit cards have evolved into an essential tool for lower- and middle-class families to maintain financial stability through strategic balancing between debt and disposable income. Now, without a credit card, many households cannot manage to meet the basic needs of their families. Credit card companies take advantage of this reality, imposing exploitative fees, interest rates, and other conditions on consumers who have no choice but to use the companies’ products. Even worse, the companies do so in a racially discriminatory way, burdening Black and Latino customers with the worst credit card terms, often unrelated to credit risk. This type of consumer racism dates back to the Reconstruction era and reflects an unbroken chain of laws and policies cementing racial economic inequality. Social norms and stereotypes make the resulting inequality appear cultural and personal instead of systemic and structural.

This Article is the first to apply a critical race theory analysis to the problem of racism against credit card consumers. After describing the role that history and stereotyping play in allowing credit card corporations to discriminate against consumers, it identifies fatal flaws in the two laws designed to address racial discrimination and inequality in credit, the Equal Credit Opportunity Act and the Community Reinvestment Act. It then proposes amendments to the Consumer Accountability Responsibility and Disclosure Act based on rehabilitative reparations theory and slavery disclosure laws that would require credit card companies to make significant investments into the communities they harm.

Article: Privacy, Poverty and Big Data: A Matrix of Vulnerabilities for Poor Americans

Article: Mary Madden, et al., Privacy, Poverty and Big Data: A Matrix of Vulnerabilities for Poor Americans, Washington L. Rev. (forthcoming 2017).

This Article examines the matrix of vulnerabilities that low-income people face as a result of the collection and aggregation of big data and the application of predictive analytics. On the one hand, big data systems could reverse growing economic inequality by expanding access to opportunities for low-income people. On the other hand, big data could widen economic gaps by making it possible to prey on low-income people or to exclude them from opportunities due to biases that get entrenched in algorithmic decision-making tools. New kinds of “networked privacy” harms, in which users are simultaneously held liable for their own behavior and the actions of those in their networks, may have particularly negative impacts on the poor. This Article reports on original empirical findings from a large, nationally-representative telephone survey with an oversample of low-income American adults and highlights how these patterns make particular groups of low-status internet users uniquely vulnerable to various forms of surveillance and networked privacy-related problems. In particular, a greater reliance on mobile connectivity, combined with lower usage of privacy-enhancing strategies may contribute to various privacy and security-related harms. The article then discusses three scenarios in which big data – including data gathered from social media inputs – is being aggregated to make predictions about individual behavior: employment screening, access to higher education, and predictive policing. Analysis of the legal frameworks surrounding these case studies reveals a lack of legal protections to counter digital discrimination against low-income people. In light of these legal gaps, the Article assesses leading proposals for enhancing digital privacy through the lens of class vulnerability, including comprehensive consumer privacy legislation, digital literacy, notice and choice regimes, and due process approaches. As policymakers consider reforms, the article urges greater attention to impacts on low-income persons and communities.

News Article: How to ensure everyone a guaranteed basic income

News Article: Steven Pearlstein, How to ensure everyone a guaranteed basic income, Washington Post (Mar. 24, 2017).

News Article: “Can Science Make People Save Money?”

News Article: Rebecca Greenfield, “Can Science Make People Save Money?,” Bloomberg, Oct. 18, 2016.

New Article: “Market Power and Inequality: The Antitrust Counterrevolution and its Discontents”

New Article: Lina Khan & Sandeep Vaheesan, Market Power and Inequality: The Antitrust Counterrevolution and its Discontents, Harv. L. & Pol’y Rev. (forthcoming).  Abstract below:

One unexplored theme in the debate around economic inequality is the role of monopoly and oligopoly power. Despite the relative lack of attention to this topic, there is sound reason to believe that pervasive market power in the economy has contributed to extreme economic disparity in the United States today. Given the affluence of shareholders and executives compared to consumers in most markets as well as the power dynamics inside large corporations, market power, in general, can be expected to have significant regressive distributional effects. Case studies of anticompetitive practices and uncompetitive market structures in several key industries illustrate how large corporations have come to dominate the U.S. economy. On top of their market power, monopolistic and oligopolistic companies translate their economic power into political influence, often successfully pushing for laws and regulation that further enhance their clout and transfer wealth upwards. Pervasive market power in the economy, which appears to be contributing to economic inequality, is the result of an intellectual and political revolution in the 1980s that dramatically reoriented and narrowed the goals of antitrust law. Importantly, this counterrevolution can be reversed. We present a vision of antitrust that accords with what Congress intended in enacting “this comprehensive charter of economic liberty” and offer specific policy prescriptions.

New Article: “Using Advertisements to Diagnose Behavioral Market Failure”

New Article: Jim Hawkins, Using Advertisements to Diagnose Behavioral Market Failure, Wake Forest L. Rev. forthcoming.  SSRN 2015.  Abstract below:

In imperfect markets where consumers have malleable preferences and bounded rationality, advertising has the potential to increase demand for products through persuasion and through information that exploits systematic mistakes that consumers make. Scholarship on advertising has criticized it on these grounds, but the legal and economic literature has missed advertising’s enormous potential to reveal consumers’ behavioral biases in specific markets. This Article argues that researchers and policymakers should use advertising to detect and diagnose behavioral market failure. 

As a case study of my strategy, I offer the first comprehensive empirical study of advertisements for payday and title loans. These are short-term, small-dollar, high-cost loans, and the majority of consumers using them are lower-income Americans. I report on research I conducted that coded information on advertisements at 189 payday and title lending storefronts and 27 websites. Using the advertisements to diagnose behavioral market failure, I find evidence that firms use advertising to exploit the ways in which payday and title lending customers deviate from the rational actor model. Finally, I offer policy suggestions aimed at fixing this market failure.