Law Commons^™

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 …

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 …

"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, …

Better Than Cash? Global Proliferation Of Debit And Prepaid Cards And Consumer Protection Policy, Arnold S. Rosenberg

ExpressO

A global deluge of debit cards and prepaid cards – payment cards that do not require consumers to qualify for credit – is rapidly making electronic payment systems accessible to much of the world’s population that previously paid in cash for goods and services. The global proliferation of payment cards is fraught with both risk and promise for consumers.

The billions of people of low to moderate incomes who are being hurled from a cash economy into the era of electronic payments in emerging economies by the proliferation of debit and prepaid cards are particularly vulnerable to abuses by banks …

Global Credit Card Use And Debt: Policy Issues And Regulatory Responses, Ronald J. Mann

ExpressO

The rise of card-based payments has transformed the landscape of payments in the last half century, from one dominated by government-supported paper-based payments to one dominated by wholly private systems. The rise of those payments presents a number of policy problems, the most serious of which is the empirically demonstrable likelihood that use of the cards contributes to an undue level of consumer credit and that borrowing on the cards contributes to a rise in the level of consumer bankruptcy. Although the existing pattern shows great variation from country to country, regulators should take no solace in those variations. Building …

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 …

Global Credit Card Use And Debt: Policy Issues And Regulatory Responses, Ronald J. Mann

Faculty Scholarship

The rise of card-based payments has transformed the landscape of payments in the last half century, from one dominated by government-supported paper-based payments to one dominated by wholly private systems. The rise of those payments presents a number of policy problems, the most serious of which is the empirically demonstrable likelihood that use of the cards here and elsewhere contributes to an undue level of consumer credit and that borrowing on the cards contributes to a rise in the level of consumer bankruptcy. Because increasing financial distress imposes substantial externalities on the economies in which it occurs, the global rise …

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 …

Credit Cards And Debit Cards In The United States And Japan, Ronald J. Mann

Vanderbilt Law Review

The widespread use of cards is one of the most salient features of consumer retail payment systems in the United States. American consumers use those cards to pay for about one-fourth of their retail purchases each year.' And this is not a static phenomenon; among other things, the use of debit cards, though still relatively small, is rising rapidly. That pattern of use is not, however, typical of other countries. Even in some highly industrialized nations, consumers use cards to pay for purchases much less frequently. Statistics from the Bank for International Settlements, for example, suggest about sixty card-based payment …

Credit Cards In The United States And Japan, Ronald J. Mann

Law Quadrangle (formerly Law Quad Notes)

The following essay is excerpted from a paper prepared during fall 2000 during the author's stay in Tokyo as a visiting scholar at the Institutefor Monetary and Economic Studies at the Bank of Japan.

One of the most important aspects of consumer payment systems in the United States is the widespread use of credit cards. American consumers use credit cards to pay for about one-fifth of their purchases each year. That pattern of use is not universal.

The Usury Trompe L'Oeil, James J. White

Articles

This Article demonstrates how the interaction of a federal statute passed in 1864,1 a case decided by the Supreme Court in 1978,2 and modem technology has legally debarred every state legislature from controlling consumer interest rates in its state-but not from passing laws that appear to do so-and has politically debarred the Congress from setting federal rates to replace the state rates. As a consequence, the elaborate usury laws on the books of most states are only a trompe l'oeil, a "visual deception... rendered in extremely fine detail ... ." The presence of these finely detailed laws gives the illusion …

Dischargeability Of Consumer Credit Card Debt After Anastas V. American Savings Bank (In Re Anastas), Samuel B. Cothran Jr.

South Carolina Law Review

No abstract provided.

Are Credit-Card Late Fees "Interest"? Delineating The Preemptive Reach Of Section 85 Of The National Bank Act Of 1864 And Section 521 Of The Depositary Institutions Deregulation And Monetary Control Act Of 1980, Kevin G. Toh

Michigan Law Review

This Note argues that neither section 85 of the NBA nor section 521 of the DIDA preempts state consumer-credit-protection laws regulating late fees on credit-card transactions. Part I discusses the three approaches that the Supreme Court has devised and used over the years to determine when a federal law preempts state law: express preemption, implied preemption, and conflict preemption. Part II applies express preemption analysis and asserts that the ordinary meaning of DIDA section 521's express preemption language does not evince Congress's intent to preempt state prohibitions of late fees. Part III applies implied preemption analysis and argues that neither …

Basic Uniform Commercial Code: Teaching Materials, David G. Epstein

Law Faculty Publications

These materials cover extensions of credit secured by a lien on personal property, sales of goods, commercial paper, credit cards, electronic funds transfer systems, and letters of credit. Some aspects of these subjects are regulated by federal statutes; some aspects are covered only by judicial decisions. Notwithstanding the important body of federal law and common law, the Uniform Commercial Code dominates this book.

Banking And Finance Credit Cards: Provide For Deregulation, J. Cronin

Georgia State University Law Review

The Act deregulates banking laws governing bank credit cards issued in Georgia. Deregulation is accomplished by eliminating the eighteen percent ceiling on interest rates, the twelve dollar annual fee limit, and other rate and fee limitations on credit cards issued in Georgia. The Act also permits out-of-state financial institutions to establish limited purpose credit card banks in Georgia. March 19, 1987

Squaring M-Naghten With Precedent--An Historical Note, Harvey Wingo

South Carolina Law Review

No abstract provided.

Unauthorized Use Of Credit Cards And Some Related Questions: What Problems Remain?, R. David Lester

Kentucky Law Journal

No abstract provided.

Consumer Protection In The Credit Card Industry: Federal Legislative Controls, John C. Weistart

Michigan Law Review

Credit cards have been used as a means of facilitating delayed-payment purchases since early in this century. The first credit card systems were operated by retailers and service organizations in connection with the merchandising of their products. While such programs were used in local markets by department stores, oil companies were the first issuers to recognize the potential of credit card plans in larger geographical areas. In the early 1950's a new phase in credit card development evolved with the emergence of firms engaging solely in the extension of credit. These firms-Diners' Club, American Express, and Hilton Credit Corporation with …

Bank Charge Cards: New Cash Or New Credit, Roland E. Brandel, Carl A. Leonard

Michigan Law Review

It is the premise of this Article that the bank charge card systems constitute a new, highly useful, and efficient payment and credit mechanism; that any decision-making body that promulgates a rule on the issue of the assertability of consumer defenses must carefully evaluate the true functions of bank charge cards, particularly their role as part of a sophisticated payment mechanism, and weigh the relative interests of the consuming public, merchants, and members of the banking industry to derive the best solution for society; that courts are ill-equipped to perform this function; and, that, given the national and international usage …

Private Legislation And The Duty To Read--Business Run By Ibm Machine, The Law Of Contracts And Credit Cards, Stewart Macaulay

Vanderbilt Law Review

"It will not do for a man to enter into a contract, and, when called upon to abide by its conditions, say that he did not read it when he signed it, or did not know what it contained."' This rallying cry often is sounded in contracts and restitution opinions. Sometimes it makes such good sense that it is axiomatic. Yet in common with all grand slogans, there are situations where it just doesn't fit...

More difficult are the cases where the words are there in a form more easily read and understood but where the probabilities are very great …