Category Archives: Consumption / Consumer Protection

New Article: Life in the Sweatbox

New Article: Pamela Foohey et al., Life in the Sweatbox, 94 Notre Dame Law Review __ (2018 Forthcoming). Abstract below:

The time before a person files bankruptcy is sometimes called the financial “sweatbox.” Using original data from the Consumer Bankruptcy Project, we find that people are living longer in the sweatbox before filing bankruptcy than they have in the past. We also describe the depletion of wealth and well-being that defines people’s time in the sweatbox. For those people who struggle for more than two years before filing bankruptcy — the “long strugglers” — their time in the sweatbox is particularly damaging. During their years in the sweatbox, long strugglers deal with persistent collection calls, go without healthcare, food, and utilities, lose homes and other property, and yet remain ashamed of needing to file. For these people in particular, though time in the sweatbox undermines their ability to realize bankruptcy’s “fresh start,” they do not file until long after the benefits outweigh the costs. This Article’s findings challenge longstanding narratives about who files bankruptcy and why. These narratives underlie our laws, influence how judges rule in individual cases, and affect how attorneys interact with their clients.

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New Article: “Discovering that the Poor Pay More: Race Riots, Poverty, and the Rise of Consumer Law”

New Article: Norman I. Silber, Discovering that the Poor Pay More: Race Riots, Poverty, and the Rise of Consumer Law, 44 Ford. Urb. L.J. 1319 (2017). Abstract below:

David Caplovitz is remembered primarily for his book The Poor Pay More and his writing about poor consumers. This article addresses why this work propelled the reconstruction of consumer financial protection law, by placing it within the context of widespread urban rioting and the civil rights movements of the 1960s. It argues that Capolvoitz presented the American political center with a clinical, denatured sociological explanation for urban rioting, which involved a more palatable and less threatening suggested response to unrest than explanations premised on intrinsic white racism or class oppression. According to Caplovitz, the riots more than anything else reflected a political and social failure to appreciate the importance of consumer finance. He recommended addressing racism and deeper social grievances through major revisions to commercial and consumer law. Sidestepping other “root causes,” Caplovitz helped courts, law-makers, and many middle-class Americans revalue consumer law and its connection to domestic peace, poverty and economic justice.

New Article: “Consumer Law As Tax Alternative”

New Article: Rory Van Loo, Consumer Law As Tax Alternative, forthcoming N.C. L. Rev., SSRN Dec. 2017. Abstract below:

The law and economics paradigm has traditionally emphasized tax and transfer as the best way to achieve distributional goals. This Article explores an alternative. Well-designed consumer laws—defined as the set of consumer protection, antitrust, and entry barrier laws that govern consumer transactions—can make markets more efficient and lessen inequality. Policymakers and scholars have traditionally ignored consumer laws in redistribution conversations in part because consumer laws examine narrow and siloed contexts—deceptive fees by Visa or a proposed merger between Comcast and Time Warner Cable. Those are different microeconomic fields, whereas redistribution is dominated by macroeconomics. Even millions of dollars in reduced credit card fees seem trivial compared to the trillion-dollar growth in income inequality that has sparked concern in recent decades. This Article synthesizes the fragmented empirical literature quantifying inefficiently higher prices across diverse markets—called overcharge. To my knowledge, it is the first to conclude that consumer law-related inefficiencies plausibly overcharge more than a trillion dollars, or over ten percent of all that consumers spend. It also analyzes which households pay and earn income from that overcharge. Consumers outside the top one percent likely pay significantly more of their expenditures toward overcharge. A static simulation also indicates that removing consumer overcharge could bring the share of income earned by the top one percent of households from its current level—twenty percent of all income—to about where it was in 1980, when the top one percent earned ten percent of all income. Moreover, this massive redistribution would be driven by laws making markets more competitive, rather than tax increases that distort markets. If the empirical literature currently available is right, consumer law merits serious consideration as an alternative to tax.

New Book: “City of Debtors: A Century of Fringe Finance”

CityofDebtorsNew Book: Anne Fleming, City of Debtors: A Century of Fringe Finance (2018). Overview below:

Since the rise of the small-sum lending industry in the 1890s, people on the lowest rungs of the economic ladder in the United States have been asked to pay the greatest price for credit. Again and again, Americans have asked why the most fragile borrowers face the highest costs for access to the smallest loans. To protect low-wage workers in need of credit, reformers have repeatedly turned to law, only to face the vexing question of where to draw the line between necessary protection and overreaching paternalism.

City of Debtors shows how each generation of Americans has tackled the problem of fringe finance, using law to redefine the meaning of justice within capitalism for those on the economic margins. Anne Fleming tells the story of the small-sum lending industry’s growth and regulation from the ground up, following the people who navigated the market for small loans and those who shaped its development at the state and local level. Fleming’s focus on the city and state of New York, which served as incubators for numerous lending reforms that later spread throughout the nation, differentiates her approach from work that has centered on federal regulation. It also reveals the overlooked challenges of governing a modern financial industry within a federalist framework.

Fleming’s detailed work contributes to the broader and ongoing debate about the meaning of justice within capitalistic societies, by exploring the fault line in the landscape of capitalism where poverty, the welfare state, and consumer credit converge.

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.

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.