Law Commons^™

Developments In The Laws Affecting Electronic Payments And Financial Services, Sarah Jane Hughes, Stephen T. Middlebrook, Tom Kierner

Articles by Maurer Faculty

The past year proved to be a busy period for the regulation of electronic payments and financial services. In this year’s survey, we discuss rulemakings, enforcement actions, and other litigation that has significantly impacted the law governing payments and financial services. Part II addresses the ongoing fight between federal and state authorities over which should properly regulate Fin- Tech entities and describes some new steps the Office of the Comptroller of the Currency (“OCC”) has taken to assert its authority in this area. Part III details an enforcement action that California regulators took against a FinTech company they determined had …

Constructing The Yellow Brick Road: Preventing Discrimination In Financial Services Against The Lgbtq+ Community, Cyrus Mostaghim

Upper Level Writing Requirement Research Papers

The Lesbian, Gay, Bisexual, Transgender, Queer, and Questioning (“LGBTQ+”) community lacks explicit statutory protections from discrimination in financial services. After the Supreme Court held in Bostock that employment discrimination based on sexual orientation or gender identity was illegal, the Consumer Financial Protection Bureau (CFPB) issued an informal interpretive rule for the Equal Credit Opportunity Act (ECOA) and Regulation B that made discrimination in the access to credit based on sexual orientation or gender identity illegal. However, this paper argues that an informal interpretive rule is easily rescinded and does not provide sufficient protection. Thus, alternative action is needed to create …

Developments In The Laws Affecting Electronic Payments And Financial Services, Sarah Jane Hughes, Steve Middlebrook, Tom Kierner

Articles by Maurer Faculty

This survey year offered developments too numerous to cover, as often is the case. We debated which developments to include and decided to showcase different types of products and services, different providers, and different regulators. Part II views issues related to stimulus payments arising from the COVID-19 pandemic. Part III reports on litigation over whether retailers must offer gift cards printed in Braille. Part IV looks at recent actions of the Federal Trade Commission ("FTC") related to payment processors and others. Part V describes amendments to the "remittance" regulation promulgated by the Consumer Financial Protection Bureau ("CFPB"). Part VI focuses …

The Salience Theory Of Consumer Financial Regulation, Natasha Sarin

All Faculty Scholarship

Prior to the financial crisis, banks’ fee income was their fastest-growing source of revenue. This revenue was often generated through nefarious bank practices (e.g., ordering overdraft transactions for maximal fees). The crisis focused popular attention on the extent to which current regulatory tools failed consumers in these markets, and policymakers responded: A new Consumer Financial Protection Bureau was tasked with monitoring consumer finance products, and some of the earliest post-crisis financial reforms sought to lower consumer costs. This Article is the first to empirically evaluate the success of the consumer finance reform agenda by considering three recent price regulations: a …

Consumer Bitcredit And Fintech Lending, Christopher K. Odinet

Faculty Scholarship

The digital economy is changing everything, including how we borrow money. In the wake of the 2008 crisis, banks pulled back in their lending and, as a result, many consumers and small businesses found themselves unable to access credit. A wave of online firms called fintech lenders have filled the space left vacant by traditional financial institutions. These platforms are fast making antiques out of many mainstream lending practices, such as long paper applications and face-to-face meetings. Instead, through underwriting by automation — utilizing big data (including social media data) and machine learning — loan processing that once took days …

Making Innovation More Competitive: The Case Of Fintech, Rory Van Loo

Faculty Scholarship

Finance startups are offering automated advice, touchless payments, and other products that could bring great societal benefits, including lower prices and expanded access to credit. Yet unlike in other digital arenas in which American companies were global leaders, such as search engines and ride hailing, the U.S. has lagged in consumer finance. This Article posits that the current competition framework is holding back consumer financial innovation. It then identifies a contributor that has yet to be articulated: the organizational design of administrative agencies. Competition authority—including antitrust and the extension of business licenses—is spread across at least five regulators. Each is …

Mandatory Arbitration In Consumer Finance And Investor Contracts, Michael S. Barr

Book Chapters

This chapter focuses on the use of mandatory pre-dispute arbitration clauses in a subset of consumer contracts – those involving consumer finance and investor products and services. Arbitration clauses are pervasive in financial contracts – for credit cards, bank accounts, auto loans, broker-dealer services, and many others. In the wake of the recent financial crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). Dodd-Frank authorises the new Consumer Financial Protection Bureau (CFPB) and the Securities and Exchange Commission (SEC) to prohibit or condition the use of arbitration clauses in consumer finance and investment contracts, …

Hurrah For The Consumer Financial Protection Bureau: Consumer Arbitration As A Poster Child For Regulation, Jean R. Sternlight

Scholarly Works

Drawing on economic, psychological and philosophical considerations, this Essay considers whether consumers should be "free" to "agree" to contractually trade their opportunity to litigate in a class action for the opportunity to bring an arbitration claim against a company. The Essay suggests that by looking at the CFPB's regulation through these three lenses, one sees that the regulation is desirable—even a poster child—for the potential value of regulation when market forces are not sufficient to protect individual or public interests.

The Funny Thing About Forced Arbitration And The Cfpb, Joanne Doroshow

Other Publications

No abstract provided.

Mandatory Arbitration In Consumer Finance And Investor Contracts, Michael S. Barr

Articles

Mandatory pre-dispute arbitration clauses are pervasive in consumer financial and investor contracts—for credit cards, bank accounts, auto loans, broker-dealer services, and many others. These clauses often ill serve households. Consumers are typically presented with contracts on a “take it or leave it” basis, with no ability to negotiate over terms. Arbitration provisions are often not clearly disclosed, and in any event are not salient for consumers, who do not focus on the importance of the provision in the event that a dispute over the contract later arises, and who may misforecast the likelihood of being in such a dispute. The …

"We Buy Houses": Market Heroes Or Criminals?, Cori Harvey

Journal Publications

The residential sale/leaseback/buyback transaction is a socially beneficial foreclosure rescue transaction that is being regulated increasingly by the criminal courts to the detriment of the homeowners, investors, and society at large. Because the transaction is being regulated more aggressively with the criminal law, peculiar outcomes arise, which include investors being sentenced, in some cases, to draconian sentences --a trend that will eviscerate the transactions rather than improving them.

In calling for a retreat from that position, this Article makes both descriptive and prescriptive claims. The first descriptive claim is that the transaction is a beneficial one and that it has …

Behaviorism In Finance And Securities Law, David A. Skeel Jr.

All Faculty Scholarship

In this Essay, I take stock (as something of an outsider) of the behavioral economics movement, focusing in particular on its interaction with traditional cost-benefit analysis and its implications for agency structure. The usual strategy for such a project—a strategy that has been used by others with behavioral economics—is to marshal the existing evidence and critically assess its significance. My approach in this Essay is somewhat different. Although I describe behavioral economics and summarize the strongest criticisms of its use, the heart of the Essay is inductive, and focuses on a particular context: financial and securities regulation, as recently revamped …

Consumer Financial Protection: It's A Smaller World After All.Pdf, Hilary Allen

Articles in Law Reviews & Other Academic Journals

Few of the reforms of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) havebeen as controversial as the creation of the Consumer Financial Protection Bureau. On the one hand,proponents envisioned the Bureau as “a single, highly motivated federal regulator, [that would apply] the sameregulation … to all similar products, regardless of the identity of the lender.” On the other hand, critics havecalled the Bureau “fatally flawed” and suggested that it has the potential to “stifle innovation and leave somemarket participants worse off.”