Law Commons^™

After Ftx: Can The Original Bitcoin Use Case Be Saved?, Mark Burge

Faculty Scholarship

Bitcoin and the other cryptocurrencies spawned by the innovation of blockchain programming have exploded in prominence, both in gains of massive market value and in dramatic market losses, the latter most notably seen in connection with the failure of the FTX cryptocurrency exchange in November 2022. After years of investment and speculation, however, something crucial has faded: the original use case for Bitcoin as a system of payment. Can cryptocurrency-as-a-payment-system be saved, or are day traders and speculators the actual cryptocurrency future? This article suggests that cryptocurrency has been hobbled by a lack of foundational commercial and consumer-protection law that …

Rebuilding Platform Antitrust: Moving On From Ohio V. American Express, Steven C. Salop, Daniel Francis, Lauren Sillman, Michaela Spero

Georgetown Law Faculty Publications and Other Works

Now that the immediate fallout from the Supreme Court’s blockbuster Amex decision has cooled, this Article aims to give a first draft of its place in antitrust history and to offer a roadmap for the next stage of the evolution of platform antitrust analysis. We focus on several issues that have not been fully analyzed in the literature. First, we argue that, rather than mangling the law of market definition, the Court should have explicitly permitted multi-market balancing of effects across the separate markets in which the platform was active. Second, we propose standards to implement such balancing in cases …

Steering Loan Modifications Post-Pandemic, Pamela Foohey, Dalie Jimenez, Christopher K. Odinet

Articles

As part of federal and state relief programs created during the COVID-19 pandemic, many American households received pauses on their largest debts, particularly on mortgages and student loans. Others may have come to agreements with their lenders, likewise pausing or altering payment on other debts, such as auto loans and credit cards. This relief allowed households to allocate their savings and income to necessary expenses, like groceries, utilities, and medicine. But forbearance does not equal forgiveness. At the end of the various relief periods and moratoria, people will have to resume paying all their debts, the amounts of which may …

Antitrust And Two-Sided Platforms: The Failure Of American Express, John B. Kirkwood

Faculty Articles

Two-sided platforms serve two sets of customers and enable them to interact with each other. The five most valuable corporations in America – Amazon, Apple, Facebook, Google, and Microsoft – all operate two-sided platforms. But despite their growing power, the Supreme Court's American Express decision has made it harder to stop them from stifling competition. This Article systematically exposes the flaws in the Court's reasoning and identifies the principles that should govern future cases. The Court’s most fundamental error was to require plaintiffs in rule of reason cases to make an initial showing of consumer harm that weighs the effects …

What’S In Your Wallet (And What Should The Law Do About It?), Natasha Sarin

All Faculty Scholarship

In traditional markets, firms can charge prices that are significantly elevated relative to their costs only if there is a market failure. However, this is not true in a two-sided market (like Amazon, Uber, and Mastercard), where firms often subsidize one side of the market and generate revenue from the other. This means consideration of one side of the market in isolation is problematic. The Court embraced this view in Ohio v. American Express, requiring that anticompetitive harm on one side of a two-sided market be weighed against benefits on the other side.

Legal scholars denounce this decision, which, …

Platforms, American Express, And The Problem Of Complexity In Antitrust, Chris Sagers

Law Faculty Articles and Essays

Everything about Ohio v. American Express was wrong and the adoption of “two-sided platform” reasoning into American antitrust law might be one of its worst, most regrettable wrong turns in decades. That is not because the original theoretical model of two-sided interaction has anything wrong with it at all. It is rather that nothing could be gained by incorporating it that could be worth the result in the American Express case itself, or the difficulty that has likely been invited into antitrust litigation. The consequences are hard to predict, but they may be severely limiting to our already moribund antitrust …

The Financial Counseling Industry: Past, Present, And Policy Recommendations, David A. Lander

All Faculty Scholarship

Financial counseling plays an important role for low- and moderate-income Americans and deserves more attention from leaders in the field. As financial counseling has evolved, the providers have been challenged to find a model that is both borrower centered and sustainable. This article provides a diagnosis of the failures and challenges in the financial counseling field, as well as a discussion of steps through which the providers could optimally serve families in need. These steps include (a) enhanced funding of the industry as a result of a recognition by financial stakeholders that it would be beneficial for them if the …

Apple Pay, Bitcoin, And Consumers: The Abcs Of Future Public Payments Law, Mark Edwin Burge

Faculty Scholarship

As technology rolls out ongoing and competing streams of payments innovation, exemplified by Apple Pay (mobile payments) and Bitcoin (cryptocurrency), the law governing these payments appears hopelessly behind the curve. The patchwork of state, federal, and private legal rules seems more worthy of condemnation than emulation. This Article argues, however, that the legal and market developments of the last several decades in payment systems provide compelling evidence of the most realistic and socially beneficial future for payments law. The paradigm of a comprehensive public law regulatory scheme for payment systems, exemplified by Articles 3 and 4 of the Uniform Commercial …

The Fine Print, Ramona L. Lampley

Faculty Articles

A recent study by the Consumer Financial Protection Bureau (“CFPB”), the federal agency tasked with “empowering consumers to take control over their economic lives,” found that more than 50 percent of the market for consumer credit cards had arbitration agreements, and almost 100 percent of storefront payday lending contracts require its customers to take their disputes to binding arbitration. The same study found that most consumers do not know their credit cards have a binding arbitration agreement and that it is not a primary concern for consumers in deciding which credit cards to obtain.

However, almost all arbitration agreements in …

L'Embarras Du Choix: A Year Of Developments In The Laws Affecting Remittance Transfers, Credit Cards, And Certain Prepaid Cards, Sarah Jane Hughes

Articles by Maurer Faculty

No abstract provided.

Behaviorally Informed Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir

Book Chapters

Policy makers typically approach human behavior from the perspective of the rational agent model, which relics on normativc, a priori analyses. The model assumes people make insightful, well-planned, highly controlled, and calculated decisions guided by considerations of personal utility. This perspective is promoted in the social sciences and in professional schools and has come to dominate much of the formulation and conduct of policy. An alternative view, developed mostly through empirical behavioral research, and the one we will articulate here, provides a substantially difierent perspective on individual behavior and its policy and regulatory implications. According to the empirical perspective, behavior …

From The Schoolhouse To The Poorhouse: The Credit Card Act's Failure To Adequately Protect Young Consumers, Eboni S. Nelson

Faculty Publications

No abstract provided.

Adopting, Using, And Discarding Paper And Electronic Payment Instruments: Variation By Age And Race, Ronald J. Mann

Faculty Scholarship

This paper uses data from the 2008 Survey of Consumer Payment Choice to discuss the adoption, use, and discarding of various common payment instruments. Using a nationally representative sample of individual-level data, it presents evidence in unparalleled detail about how consumers use different payment instruments. Most interestingly, it displays robust evidence of significant age- and race-related differences in payments choices. Among other things, it suggests that the range of payment instruments adopted and regularly used by blacks is narrower than that chosen by whites, presumably because of relatively limited access to financial institutions. With regard to age, it documents pervasive …

The Rise In Elder Bankruptcy Filings And The Failure Of U.S. Bankruptcy Law, John A. E. Pottow

Articles

Recent empirical legal scholarship on the consumer bankruptcy system has uncovered a marked rise in the proportion of elder Americans filing for relief under the Bankruptcy Code. But these studies have not probed the reasons behind that rise, an omission this Article seeks to address. Professor John Pottow and colleagues recently assembled the new dataset of the Consumer Bankruptcy Project (CBP), the largest national sample of consumer debtors in this country, which he uses to explore the sources of elder bankruptcy. The findings are both striking and ominous. While multiple factors, such as health problems and medical debts, contribute to …

Developments In The Laws Governing Electronic Payments Made Through Gift Cards, Debit And Prepaid Cards, Credit Cards, And Direct Deposits Of Federal Benefits, Sarah Jane Hughes, Stephen T. Middlebrook

Articles by Maurer Faculty

No abstract provided.

Consumer Debt - Are Credit Cards Bankrupting Americans: Hearing Before The Subcomm. On Commercial & Administrative Law Of The H. Comm. On The Judiciary, 111th Cong., April 2, 2009 (Statement Of Associate Professor Adam J. Levitin, Geo. U. L. Center), Adam J. Levitin

Testimony Before Congress

I urge the Congress to take up a comprehensive program of credit card reform legislation. While repealing parts of the BAPCPA is a key element to creating a fair and sustainable card lending industry, that alone will not eliminate predatory lending models. Instead, I strongly urge the Congress to consider mandating term standardization and price structure simplification for credit cards.

Abusive Credit Card Practices And Bankruptcy: Hearing Before The S. Comm. On The Judiciary, 111th Cong., March 24, 2009 (Statement Of Associate Professor Adam J. Levitin, Geo. U. L. Center), Adam J. Levitin

Testimony Before Congress

The Marquette decision created a regulatory arbitrage possibility that set off a regulatory race to the bottom. Congress should act to close this loophole. There is a reasonable debate to be had on usury regulations, but that is one that should be held in legislatures, not determined by the Supreme Court's interpretation of a hoary statute. A 1970s interpretation of an 1863 law should not be what determines 21st century consumer credit regulation. Congress should permit the states, the laboratories of democracy, to go further than S.257 if they wish in regulating high-interest-rate consumer credit. This essential consumer protection power …

Modernizing Consumer Protection In The Financial Regulatory System; Strengthening Credit Card Protections: Hearing Before The S. Comm. On Banking, Housing, And Urban Affairs, 111th Cong., Feb. 12, 2009 (Statement Of Associate Professor Adam J. Levitin, Geo. U. L. Center), Adam J. Levitin

Testimony Before Congress

Transparent pricing is a prerequisite for an efficient, competitive market and responsible consumer behavior. If the card industry were required to price its products in a straightforward manner, and it were less costly for consumers to switch cards, deceptive practices would be harder to maintain, Truth-in-Lending disclosures would be more effective, as consumers would be able to easily compare cards and make informed decisions about card usage, and competitive pressures would push down total card, prices, forcing the card industry to operate more efficiently, benefiting all consumers.

I strongly urge Congress to pass legislation that creates transparency in credit card …

The Case For Behaviorally Informed Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir

Book Chapters

Policymakers approach human behavior largely through the perspective of the “rational agent” model, which relies on normative, a priori analyses of the making of rational decisions. This perspective is promoted in the social sciences and in professional schools, and has come to dominate much of the formulation and conduct of policy. An alternative view, developed mostly through empirical behavioral research, provides a substantially different perspective on individual behavior and its policy implications. Behavior, according to the empirical perspective, is the outcome of perceptions, impulses, and other processes that characterize the impressive machinery that we carry behind the eyes and between …

A Tale Of Two Debtors: Bankruptcy Disparities By Race, Rory Van Loo

Faculty Scholarship

This article offers the first quantitative evidence on race and bankruptcy. Minority debtors fare worse overall in bankruptcy — blacks are 40% and Hispanics 43% less likely than whites to receive a discharge in Chapter 13 after controlling for variables such as education, income, and employment. While the data do not allow for causal inference, Chapter 13 trustees were twice as likely to have made a motion to dismiss even against black debtors who ultimately completed their multi-year bankruptcy plans than against similar white debtors. The paper also indicates that a lack of attorney representation by minority debtors may make …

Developments In The Laws Affecting Electronic Payments And Stored-Value Products: A Year Of Stored-Value Bankruptcies, Significant Legislative Proposals, And Federal Enforcement Actions, Sarah Jane Hughes, Stephen T. Middlebrook, Patricia J. Allouise

Articles by Maurer Faculty

No abstract provided.

Behaviorally Informed Financial Services Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir

Other Publications

Financial services decisions can have enourmous consequences for household well-being. Households need a range of financial services - to conduct basic transactions, such as receiving their income, storing it, and paying bills; to save for emergency needs and long-term goals; to access credit; and to insure against life's key risks. But the financial services system is exceedingly complicated and often not well-designed to optimize house-hold behavior. In response to the complexity of out financial system, there has been a long running debate about the appropriate role and form of regulation. Regulation is largely stuck in two competing models - disclosure, …

Data Security And Tort Liability, Vincent R. Johnson

Faculty Articles

Established tort principles carefully applied to the contemporary problems of cybersecurity and identity theft can perform a key role in protecting the economic foundations of modern life. Tort law offers an appropriate legal regime for allocating the risks and spreading the costs of database intrusion-related losses. It can also create incentives, on the part of both database possessors and data subjects, to minimize the harm associated with breaches of database security.

In considering this field of tort law, it is useful to differentiate three questions. The first issue is whether database possessors have a legal duty to safeguard data subjects’ …

Private Liability For Reckless Consumer Lending, John A. E. Pottow

Articles

Congress recently enacted amendments to the Bankruptcy Code that possess the overarching theme of cracking down on debtors due to the increasing rate at which individuals have been filing for bankruptcy. Taking into account the correlation between the overall rise in consumer credit card debt and the rate of individual bankruptcy filings, the author nevertheless hypothesizes that not all credit card debt is troubling. Instead, the author proposes that the catalyst driving individual bankruptcy rates higher than ever is the level of "bad credit"-or credit extended to individuals even though there is a reasonable likelihood that the individual will be …

Abuse Prevention 2005, James J. White

Articles

Today I do not debate the empirical question (what is the cause of the increase in bankruptcy filings?) nor do I address the buried moral question (who deserves the protection of bankruptcy law?). Rather, I speculate about the consequences of 2005 amendments to the Bankruptcy Code and about the reasons it will achieve or fail to achieve the goals of its sponsors. Along the way I hope to learn something about how law changes, or fails to change behavior.

Credit Cards, Consumer Credit, And Bankruptcy, Ronald J. Mann

Faculty Scholarship

This paper analyzes the effects of credit card use on broader economic indicators, specifically consumer credit, and consumer bankruptcy filings. Using aggregate nation-level data from Australia, Canada, Japan, the United Kingdom, and the United States, I find that credit card spending, lagged by 1-2 years, has a strong positive effect on consumer credit. Finally, I find a strong relation between credit card debt, lagged by 1-2 years, and bankruptcy, and a weaker relation between consumer credit, lagged by 1-2 years, and bankruptcy. The relations are robust across a variety of different lags and models that account for problems of multicollinearity …

"Contracting" For Credit, Ronald J. Mann

Faculty Scholarship

On a recent day, I used my credit cards in connection with a number of minor transactions. I made eight purchases, and I paid two credit card bills. I also discarded (without opening) three solicitations for new cards, balance transfer programs, or other similar offers to extend credit via a credit card. Statistics suggest that I am not atypical. U.S. consumers last year used credit cards in about 100 purchasing transactions per capita, with an average value of about $70. At the end of the year, Americans owed nearly $500 billion dollars, in the range of $1,800 for every man, …

Optimizing Consumer Credit Markets And Bankruptcy Policy, Ronald J. Mann

Faculty Scholarship

This Article explores the relationship between consumer credit markets and bankruptcy policy. In general, I argue that the causative relationships running between borrowing and bankruptcy compel a new strategy for policing the conduct of lenders and borrowers in modern consumer credit markets. The strategy must be sensitive to the role of the credit card in lending markets and must recognize that both issuers and cardholders are well placed to respond to the increased levels of spending and indebtedness. In the latter parts of the Article, I recommend mandatory minimum payment requirements, a tax on distressed credit card debt, and the …

Making Sense Of Payments Policy In The Information Age, Ronald J. Mann

Faculty Scholarship

Although I had been mulling over the ideas in this Essay for quite some time, I finally was driven to put the ideas on paper by a call from a colleague one Friday afternoon. He recently had purchased something on the Internet. Regrettably, the Internet merchant had never shipped the goods; apparently the merchant had failed. My colleague had given the merchant the number from his Visa card to pay for the transaction. Being well educated, my colleague assumed that he could have the charge removed from his credit card statement.

When he called the toll-free service line for the …

Credit Card Policy In A Globalized World, Ronald J. Mann

Faculty Scholarship

This paper relies on data from countries around the world to present a comprehensive analysis of policy issues related to credit cards. The first part discusses the rise of credit cards and debit cards and how their uses differ from country to country. It closes with a framework for explaining why cards are more and less successful in different countries, focusing in large part on the ready availability of detailed consumer credit information. The second part considers the relation between credit card use and bankruptcy. Relying on a time series of data from the United States, Canada, Great Britain and …