Consumer Protection Law Commons^™

Read But Not Understood? An Empirical Analysis Of Consumer Comprehension In Homeowners Insurance, Daniel Benjamin Schwarcz, Brenda Cude, Kyle D. Logue, German Marquez Alcala

Articles

Modern contract law assumes that consumers meaningfully assent to the standard forms that govern their daily lives. However, this assumption is widely regarded as a legal fiction for two key reasons: first, most consumers do not read standard forms, and second, even those who do often struggle to fully comprehend their terms and implications. Although the lack of consumer reading has been well documented through empirical research, consumers’ ability to comprehend standard-form contracts has received surprisingly little attention.

This Article addresses the latter issue by empirically examining whether providing excerpts from the dominant standard-form homeowners insurance policy improves consumer understanding …

Reclaiming Homeowner Wealth: A Conversation With Barry, Fried, And Hatfield, Prentiss Cox

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Homeowners in the United States pay residential real estate brokers commission rates that are about twice as high as the commission charges by brokers in comparable countries. Given the enormous size of the residential home sale market—both in aggregate terms and as a percentage of wealth owned by the average homeowner—this cost discrepancy results in U.S. homeowners transferring tens of billions of dollars each year to brokers that would be saved in a more competitive and fair market. In Et Tu, Agent? Commission-Based Steering in Residential Real Estate (“Et Tu?”), Jordan M. Barry, Will Fried, and John William Hatfield provide …

Swiping Rights: Hidden Costs Of Hidden Laws, Rachel Landy

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While many legal regimes have undergone fundamental shifts to account for the online economy, one lags behind: industry-specific mandatory contract rules. These rules, frequently buried in decades-old, nonintuitive statutes, are often overly prescriptive and come with draconian penalties, hampering the goals of entrepreneurship and impeding startup growth.

Much has been written about the intersection of regulation and entrepreneurship. But sparse attention has been paid to the unintended consequences on early-stage companies of more subtle regulatory interventions like contract rules — especially those with inconsistent or conflicting requirements among the states. This Article begins to fill that gap and uses as …

Locating Consumer Financial Regulation, Nikita Aggarwal

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Recent advances in data-driven technology in consumer financial markets, commonly referred to as "fintech," have resurfaced the question of whether and to what extent data, particularly consumers' personal data, should be a locus for regulatory intervention in these markets. While innovation in fintech and the accompanying increase in the processing of personal data offer to improve the functioning of consumer financial markets, like all advances in technology, they also come with costs and risks. In 2024, in a move that favored the regulation of personal financial data per se and many of the traditional features of personal data protection regulation, …

Narrowing The Frame: Consumer Insurance Policies And The Limits Of The Restatement Of Consumer Contracts, Daniel Benjamin Schwarcz

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No abstract provided.

What Do Consumers Understand About Predispute Arbitration Agreements? An Empirical Investigation, Roseanna Sommers

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The results of a survey of 1,071 adults in the United States reveal that most consumers do not pay attention to, let alone understand, arbitration clauses in their everyday lives. The vast majority of survey respondents (over 97%) report having opened an account with a company that requires disputes to be submitted to binding arbitration (e.g., Netflix, Hulu, Cash App, a phone or cable company), yet most are unaware that they have, in fact, agreed to mandatory arbitration (also known as “forced arbitration”). Indeed, over 99% of respondents who think they have never entered into an arbitration agreement likely have …

America's Next "Stop Model!": Model Deletion, Jevan Hutson, Ben Winters

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This Essay explores the emergence of model deletion- the compelled destruction or dispossession of certain data, algorithms, models, and associated work products created or shaped by illegal means- as a remedy, right, and requirement for harmful applications of Al and ML systems. Part I examines model deletion's emergence as a consumer protection remedy and its conception as a positive right and regulatory requirement. Part II considers the constellation of federal and state actors, such as federal and state enforcement agencies and legislative bodies, who might seek model deletion to address particular Al and ML harms. Part III underscores the need …

Mandating Repair Scores, Aaron Perzanowski

Articles

Restrictions on the repair of consumer goods have generated no shortage of policy proposals. This Article considers the empirical and legal case for one particular intervention—requiring firms to calculate and disclose their products’ scores on a uniform reparability index. These repair scores would provide consumers with salient information at or before the point of sale, enabling them to compare products on the basis of the ease and cost of repair. There is considerable empirical research, including assessments of France’s implementation of a similar requirement in recent years, suggesting that repair scores would both inform and empower consumers. Despite likely First …

From The Editors In Chief, Kathleen Claussen, Sergio Puig, Michael Waibel

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No abstract provided.

Just Kidding? The Problem Of Unenforceable Waivers Of Liability, Anthony J. Sebok

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No abstract provided.

The Private Attorney General In A Time Of Hyper-Polarized Politics, Myriam E. Gilles

Articles

With the enactment of the Federal Trade Commission Act (“FTC Act”) in 1914 and the Wheeler–Lea Act in 1938, Congress sought to establish a brawny federal consumer protection regime to guard against the myriad unfair and deceptive practices that threatened harm to American consumers. But courts in this era interpreted these statutes to confer exclusive enforcement authority in the Federal Trade Commission (“FTC”), declining to infer a private right of action. For many decades, the resulting enforcement gap in consumer protection law was filled largely by state Unfair and Deceptive Practices Acts (“UDAPs”), which sanction litigation by both public and …

At The Nexus Of Antitrust & Consumer Protection, Luke Herrine

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This Essay uses Section 5 of the Federal Trade Commission Act to examine the theoretical and practical relationship between antitrust and consumer protection law. It argues that, since roughly 1980, there has been a hegemonic "neoliberal"framework, one that has in recent years been challenged by an emerging "moral economy" framework. The neoliberal framework conceptualizes antitrust as preventing firms from conspiring to throttle output, with a focus primarily on consumers' interests in low prices, and consumer protection as making consumers informed, rational, and able to switch between competitors with relatively low cost. The moral economy framework conceptualizes both areas of law …

Title Theft, Stewart E. Sterk

Articles

Real property owners across the country have been targeted by scammers who prepare deeds purporting to convey title to property the scammers do not own. Sometimes, the true owners are entirely unaware of these bogus transfers. In other instances, the scammers use misrepresentation to induce unsophisticated owners to sign documents they do not understand. Property doctrine protects owners against forgery and fraud—the primary vehicles scammers use in their efforts to transfer title. Owners enjoy protection not only against the scammers themselves, but generally against unsuspecting purchasers to whom the scammers transfer purported title. Recovery of title, however, involves costs and …

Physiognomic Artificial Intelligence, Luke Stark, Jevan Hutson

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The reanimation of the pseudosciences of physiognomy and phrenology at scale through computer vision and machine learning is a matter of urgent concern. This Article—which contributes to critical data studies, consumer protection law, biometric privacy law, and antidiscrimination law—endeavors to conceptualize and problematize physiognomic artificial intelligence (“AI”) and offer policy recommendations for state and federal lawmakers to forestall its proliferation.

Physiognomic AI, as this Article contends, is the practice of using computer software and related systems to infer or create hierarchies of an individual’s body composition, protected class status, perceived character, capabilities, and future social outcomes based on their physical …

Product Liability Action: A Tooth To Strengthen Consumer Protection, Ashok R. Patil

Articles

As the world shifts to technological advancements, the advent of e-commerce marks its peak, particularly in India, where it has been earmarked as the fastest growing market with an annual growth rate of 51%. While these developments are an important part of globalization, a few challenges come along. Issues like unfair contracts, privacy, data protection, faulty goods, refund or return remained unaddressed as the earlier existing Consumer Protection Act, 1986 did not elucidate on the same. Given the above, the Law Commission of India had recommended that a separate law be enacted for better consumer protection. Based on the recommendations …

Autonomous Vehicle Regulation & Trust: The Impact Of Failures To Comply With Standards, William H. Widen, Phillip Koopman

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The autonomous vehicle (AV) industry works very hard to create public trust in both AV technology and its developers. Building trust is part of a strategy to permit the industry itself to manage the testing and deployment of AV technology without regulatory interference. This article explains how industry actions to promote trust (both individually and collectively) have created concerns rather than comfort with this emerging technology. The article suggests how the industry might change its current approach to law and regulation from an adversarial posture to a more cooperative one in which a space is created for government regulation consistent …

Portraits Of Bankruptcy Filers, Pamela Foohey, Robert M. Lawless, Deborah Thorne

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One in ten adult Americans has turned to the consumer bankruptcy system for help. For almost forty years, the only systematic data collection about the people who file bankruptcy has come from the Consumer Bankruptcy Project (CBP), for which we serve as co-principal investigators. In this Article, we use CBP data from 2013 to 2019 to describe who is using the bankruptcy system, providing the first comprehensive overview of bankruptcy filers in thirty years. We use principal component analysis to leverage these data to identify distinct groups of people who file bankruptcy. This technique allows us to situate the distinctions …

Assessment Of Consumer Protection Act 2019 To Support Tobacco Control In India, Ashok R. Patil

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The use of tobacco products has been clearly established to cause significant medical and economic harm. While specific tobacco control legislation has been enacted in the form of the COTPA 2003, it is important to examine if other legislations can be utilised for regulation of tobacco consumption. One such legislation is the Consumer Protection Act 2019, which significantly expands the rights of consumers and protection given to them in terms of product safety and product quality. Accordingly, this paper provides an in-depth analysis of the Consumer Protection Act 2019 and the scope of utilising this legislation and the jurisprudence on …

Dynamic Pricing Algorithms, Consumer Harm, And Regulatory Response, Alexander Mackay, Samuel Weinstein

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Pricing algorithms are rapidly transforming markets, from ride-sharing, to air travel, to online retail. Regulators and scholars have watched this development with a wary eye. Their focus so far has been on the potential for pricing algorithms to facilitate explicit and tacit collusion. This Article argues that the policy challenges pricing algorithms pose are far broader than collusive conduct. It demonstrates that algorithmic pricing can lead to higher prices for consumers in competitive markets and even in the absence of collusion. This consumer harm can be initiated by a single firm employing a superior pricing algorithm. Higher prices arise from …

The Rules Of Professional Responsibility And Legal Finance: A Status Update, Anthony J. Sebok

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Legal finance occurs when strangers fund litigation for profit. Traditionally looked upon with suspicion in the common law, and limited by the doctrines of champerty and maintenance, legal finance is now a thriving part of the American legal landscape. Legal finance has been promoted as a solution to the access-to-justice problems facing working and middle class Americans, as well as a new asset class for Wall Street. At the center of legal finance, however, are lawyers – not the lawyers who write the contracts for the financing – but the lawyers for the cases being financed.
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What Is Consumer Protection For?, Luke Herrine

Articles

When law and economics barreled its way into consumer protection scholarship two score years ago, it brought with it the consumer sovereignty framework: an approach to analysis in which actual markets are compared to an ideal market in which consumers optimize exogenous welfare functions by choosing between optimally competitive sellers. Even after two decades of behavioralist critique and even with increasingly critical perspectives taking root since the Global Financial Crisis, this consumer sovereignty ideal continues to serve as both a descriptive and normative baseline for consumer protection scholarship.

This Article argues that it is time to reconsider the consumer sovereignty …

Addictive Technology And Its Implications For Antitrust Enforcement, James Niels Rosenquist, Fiona M. Scott Morton, Samuel N. Weinstein

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The advent of mobile devices and digital media platforms in the past decade represents the biggest shock to cognition in human history. Robust medical evidence is emerging that digital media platforms are addictive and, when used in excess, harmful to users’ mental health. Other types of addictive products, like tobacco and prescription drugs, are heavily regulated to protect consumers. Currently, there is no regulatory structure protecting digital media users from these harms. Antitrust enforcement and regulation that lowers entry barriers could help consumers of social media by increasing competition. Economic theory tells us that more choice in digital media will …

Contract Schemas, Roseanna Sommers

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This review draws on the notion of “contract schemas” to characterize what ordinary people think is happening when they enter into contractual arrangements. It proposes that contracts are schematically represented as written documents filled with impenetrable text containing hidden strings, which are routinely signed without comprehension. This cognitive template, activated whenever people encounter objects with these characteristic features, confers certain default assumptions, associations, and expectancies. A review of the literature suggests that contract schemas supply (a) the assumption that terms will be enforced as written, (b) the feeling that one is obligated to perform, and (c) the sense that one …

The Mysterious Market For Post-Settlement Litigant Finance, Ronen Avraham, Lynn A. Baker, Anthony J. Sebok

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Litigant finance is a growing and increasingly controversial industry in which financial firms advance a plaintiff money in exchange for ownership rights in the proceeds of the legal claim on a nonrecourse basis: A plaintiff must repay the advance only if compensation is ultimately received for the legal claim. The nonrecourse nature of this funding exempts it from most states’ consumer credit laws, enabling funders to charge higher interest and fees than would otherwise be permitted. When this funding involves ordinary consumers, critics of the industry contend that the uncapped interest rates exploit vulnerable litigants, while its defenders argue that …

Bursting The Auto Loan Bubble In The Wake Of Covid-19, Pamela Foohey

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Before the COVID-19 pandemic, auto loans outstanding in the United States had soared to record highs. The boom in lending spanned new and used cars and traditional and subprime loans. With loan delinquencies also hitting new highs almost every quarter, predictions that the auto lending market could burst soon abounded. When the economy came to a grinding halt and unemployment skyrocketed in the wake of the pandemic, auto lenders knew they were facing a crisis. Throughout 2020, auto lenders granted more payment forbearances to consumers, while slashing interest rates on new loans. Auto manufacturers similarly made promises to buyers, such …

Cy Prés Settlements In Privacy Class Actions / Acuerdos Cy Prés En Acciones De Clase Sobre Privacidad, Thomas E. Kadri, Ignacio N. Cofone

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This essay considers the potential for using cy prés settlements in privacy class actions. These settlements are a procedural mechanism to overcome distribution challenges in class actions. When it is too burdensome to prove individual claims or too costly to distribute damages to class members, courts on occasions award damages to a charity or non-profit organization involved in work serving the class members' interests. These controversial settlements have been gaining attention in various legal systems. The U.S. Supreme Court recently considered their propriety in Frank v. Gaos, while courts in Canada and several Latin American countries have been experimenting with …

The Mdl Revolution And Consumer Legal Funding, Ronen Avraham, Lynn A. Baker, Anthony J. Sebok

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Third-party consumer legal funding, where financial companies advance money on a nonrecourse basis to assist individual plaintiffs with living expenses, is an increasingly popular and controversial part of American litigation. And consumers with mass tort claims pending in Multi-District Litigations (MDLs) constitute the fastest growing sector of those seeking assistance from this billion-dollar funding industry. Policy makers, mass tort plaintiffs' lawyers, and scholars have increasingly raised concerns about exorbitant interest rates and have called for regulations to protect vulnerable consumers from “predatory lending.” To date, however, the policy debate has largely relied on anecdotes and speculation because flinders have not …

All-Caps, Yonathan A. Arbel, Andrew Toler

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A hallmark of consumer contracts is their use of long blocks of capitalized text. These "all-caps" clauses are meant to alert consumers to nonstandard, risky, or important aspects of the transaction that would otherwise be hidden in the fine print. Based on a belief in the power of all-caps, courts will often deny enforcement of many key terms-such as war­ranty disclaimers, liability releases, arbitration clauses, and automatic billing-unless they are presented in all-caps. This article is the first to empirically examine the effectiveness of all-caps. Using an experimental methodology, the article finds that all-caps fail to apprecia­bly improve consent. Moreover, …

Unwaivable: Public Enforcement Claims And Mandatory Arbitration, Myriam E. Gilles, Gary Friedman

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This essay, written for a conference on the “pathways and hurdles” that lie ahead in consumer litigation, is the first to examine the implications of California’s recent jurisprudence holding public enforcement claims unwaivable in standard-form contracts of adhesion, and the inevitable clash with the U.S. Supreme Court’s decisional law interpreting the Federal Arbitration Act. With its rich history of rebuffing efforts to deprive citizens of public rights through private contract, California provides an ideal laboratory for exploring this escalating conflict.

Theory Of The Nudnik: The Future Of Consumer Activism And What We Can Do To Stop It, Yonathan A. Arbel, Roy Shapira

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How do consumers hold sellers accountable and enforce market norms? This Article contributes to our understanding of consumer markets in three ways. First, the Article identifies the role of a small subset of consumers-the titular "nudniks"-as engines of market discipline. Nudniks are those who call to complain, speak with managers, post online reviews, and file lawsuits. Typified by an idiosyncratic utility function and certain unique personality traits, nudniks pursue action where most consumers remain passive. Although derided in courtrooms and the court of public opinion, we show that nudniks can solve consumer collective action problems, leading to broad market improvements. …