Consumer Protection Law Commons^™

Pharmaceutical "Pay-For-Delay" Reexamined: A Dwindling Practice Or A Persistent Problem?, Laura Karas, Gerard F. Anderson, Robin Feldman

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The Supreme Court ruled in FTC v. Actavis that a delay in generic entry may be anticompetitive when part of a patent settlement includes a large and otherwise unjustified value transfer to the generic company, termed a reverse payment patent settlement, or "pay-for-delay." Following Actavis, drug companies have limited the size of reverse payments and have fashioned settlement terms that include more discreet categories of compensation to generic companies. In light of the fact that such settlements retain the potential for anticompetitive effects, the apparent size of the reverse payment may no longer be a useful gauge of the …

Consumer Psychology And The Problem Of Fine Print Fraud, Roseanna Sommers, Meirav Furth-Matzkin

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This Article investigates consumers' beliefs about contracts that are formed as a result of fraud. Across four studies, we asked lay survey respondents to judge scenarios in which sellers use false representations to induce consumers to buy products or services. In each case, the false representations are directly contradicted by the written terms of the contract, which the consumers sign without reading. Our findings reveal that lay respondents, unlike legally trained respondents, believe that such agreements are consented to and will be enforced as written, despite the seller's material deception. Importantly, fine print discourages consumers from wanting to take legal …

Disabling Fascism: A Struggle For The Last Laugh In Trump’S America, Madeleine M. Plasencia

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Six years before the start of the Second World War and seven months after Hitler’s appointment as Chancellor of Germany, the German government instituted the “Law for the Prevention of Progeny with Hereditary Diseases.” The moral depravity that started as a sterilization program targeting “useless eaters” and lives “unworthy of life” degenerated into a “euthanasia” program that murdered at least 250,000 people with mental and physical dis/abilities as an “open secret” until 1941, when the Bishop of Munster, Clemens August Count von Galen, delivered a sermon protesting the killing of “unproductive people.”2 Although the Trump Administration has not yet driven …

Regulating Foreign Commerce Through Multiple Pathways: A Case Study, Kathleen Claussen

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This Essay looks at the regulation of foreign distilled spirits coming into the United States as a lens through which to understand how trade commitments become a part of U.S. law. The experience of distilled spirits in the last forty years demonstrates that trade agreements have the power to create new domestic rules, to lock in rules already on the books, and to be entirely powerless in the face of executive branch intransigence. But this story is just one illustration of competing authorities and unclear allegiances among the branches when it comes to issues of cross-border movement of goods and …

Payday, Yonathan A. Arbel

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Legislation lags behind technology all too often. While trillions of dollars are exchanged in online transactions-safely, cheaply, and instantaneously-workers still must wait two weeks to a month to receive payments from their employers. In the modern economy, workers are effectively lending money to their employers, as they wait for earned wages to be paid.

The same worker who taps a credit card to pay for groceries in semiautomated checkout lines depends on dated payroll systems that only transfer payments on a "payday." Workers, especially those living paycheck-to-paycheck, are hard-pressed to meet their daily needs and turn to expensive, short-term credit …

Consumer Activism: From The Informed Minority To The Crusading Minority, Yonathan A. Arbel, Roy Shapira

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Legal scholars have long recognized that market norms are respected not only because of consumer protection laws, but also because of internal market dynamics. Consumers, the argument goes, fend for themselves and hold sellers accountable. But how exactly do consumers discipline sellers? The most influential model has been the informed minority theory, according to which a critical mass of informed consumers reads and negotiates contracts in advance, thereby pressuring sellers to offer better contracts to all consumers. Recent empirical studies, however, cast doubt on the existence of such a mass, leading many to view the informed minority theory as unrealistic. …

An Empirical Investigation Of Third Party Consumer Litigant Funding, Ronen Avraham, Anthony J. Sebok

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This is the first large-scale empirical study of consumer third-party litigation funding in the United States. Despite being part of the American legal system for more than two decades there has been almost no real data-driven empirical study to date. We analyzed funding requests from American consumers in over 100,000 cases over a twelve year period. This proprietary data set was provided to us by one of the largest consumer litigation funder in the United States.

Our results are striking and important. We find that the funder plays an important role in the American legal system by screening cases. Our …

Reputation Failure: The Limits Of Market Discipline In Consumer Markets, Yonathan A. Arbel

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Many believe that consumer-sourced reputational information about products should increasingly replace top-down regulation. Instead of protecting consumers through coercive laws, reputational information gleaned from the wisdom of the crowd would guide consumer decision-making. There is now a growing pressure to deregulate in diverse fields such as contracts, products liability, consumer protection, and occupational licensing.

This Article presents a common failure mode of systems of reputation: "Reputation Failure." By spotlighting the public-good nature of reviews, rankings, and even gossip, this Article shows the mismatch between the private incentives consumers have to create reputational information and its social value. As a result …

Liberal Constitutionalism And Economic Inequality, Rosalind Dixon, Julie Suk

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Economic inequality is rising in democracies across the world and poses a clear threat to both the stability and legitimacy of liberal constitutional models. Can liberal constitutionalism respond to this threat? Or are there inherent limits to the liberal model that prevent an effective response? This Essay explores these questions by surveying the range of possible structural and rights-based constitutional responses to economic inequality, as well as possible obstacles to these responsesincluding problems of definition, leveling up versus down, unintended or counterproductive consequences, and institutional path dependence.

Fintech: Antidote To Rent-Seeking?, Jeremy Kidd

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Fintech is a reality of our modern society, and will likely become even more so in the future. Peer-to-peer lending, cybercurrencies, smart contracts, algorithmic lending, and more, have required adaptation by consumers and producers of financial services. Our modes of doing business will continue to be challenged and changed by these and other Fintech innovations, almost certainly expanding beyond merely “promot[ing] financial inclusion, expand[ing] access to capital for individuals and small businesses, and more broadly reshap[ing] how society interacts with financial services.” By reducing transaction costs, advancing technology opens the doors to innovations the likes of which we might not …

Adminization: Gatekeeping Consumer Contracts, Yonathan A. Arbel

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Large companies and debt collectors frequently file unmeritorious claims against consumers. Recent high-profile actions brought by the Consumer Financial Protection Bureau against J.P. Morgan, Citibank, and other large debt collectors illustrate the breadth and importance of this phenomenon. Due to the limited financial power of individuals, consumers often do not defend against such baseless claims, which results in the entry of millions of default judgments every year. To combat this problem, policymakers and scholars have explored a variety of court-based solutions that would make it easier for consumers to defend in court, but these prove ineffectual.

To solve the problem …

Why Intra-Brand Dealer Competition Is Irrelevant To The Price Effects Of Tesla's Vertical Integration, Daniel A. Crane

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"In recent years, Tesla Motors (recently renamed Tesla) has been engaged in a state-by-state ground way for the right to distribute it’s all-electric vehicles directly to consumers. The car dealers' lobby, with the political backing of General Motors, has fiercely battled back, relying on decades-old state dealer protection laws to argue that Tesla is legally bound to distribute through franchised dealers. Through a combination of favorable state legislative and judicial decisions, Tesla has won the right to distribute directly in many states, but remains categorically barred from direct distribution in important states like Michigan and Texas--and hence all direct distribution …

Financial Reform: Making The System Safer And Fairer, Michael S. Barr

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In the fall of 2008, the financial crisis crushed the U.S. economy and plunged the country into the Great Recession. The crisis shuttered American businesses, cost millions of Americans their jobs, and wiped out home values and household savings. The macro effects hit hardest and were the longest lasting for those least able to bear the brunt of the crisis. It was devastating to middle-income families and perhaps even more so to low- and moderate-income households, who had little financial buffer (Barr 2012a). Financial stability, never robust for these families, dropped precipitously (Barr and Schaffa 2016). Both in the United …

The Taking Economy: Uber, Information, And Power, Ryan Calo, Alex Rosenblat

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Sharing economy firms such as Uber and Airbnb facilitate trusted transactions between strangers on digital platforms. This creates economic and other value but raises concerns around racial bias, safety, and fairness to competitors and workers that legal scholarship has begun to address. Missing from the literature, however, is a fundamental critique of the sharing economy grounded in asymmetries of information and power.

This Essay, coauthored by a law professor and a technology ethnographer who studies work, labor, and technology, furnishes such a critique and proposes a meaningful response through updates to consumer protection law. Commercial firms have long used what …

How Privacy Distorted Standing Law, Felix T. Wu

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No abstract provided.

Debunking Humphrey's Executor, Daniel A. Crane

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The Supreme Court’s 1935 Humphrey’s Executor decision paved the way for the modern administrative state by holding that Congress could constitutionally limit the President’s powers to remove heads of regulatory agencies. The Court articulated a quartet of features of the Federal Trade Commission’s (“FTC”) statutory design that ostensibly justified the Commission’s constitutional independence. It was to be nonpartisan and apolitical, uniquely expert, and performing quasi-legislative and quasi-judicial, rather than executive, functions. In recent years, the staying power of Humphrey’s Executor has been called into question as a matter of constitutional design. This Essay reconsiders Humphrey’s Executor from a different angle. …

The Secession Of The Successful: The Rise Of Amazon As Private Global Consumer Protection Regulator, Jane K. Winn

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In 2005, the Americans for Fair Electronic Commerce Transactions (“AFFECT”) coalition issued a list of 12 principles it hoped would contribute to a new consensus about what constitutes fairness in online consumer transactions. A decade later, a cursory review of different jurisdictions indicates that, while there has been little discernable progress in the direction of the principles in the United States, other jurisdictions such as the European Union have made more progress.

However, the one jurisdiction in the world that comes closest to implementing all 12 principles across the full spectrum of consumer transactions is not a government at all, …

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

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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 …

Tesla And The Car Dealers' Lobby, Daniel A. Crane

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Tesla Motors, the offspring of entrepreneur Elon Musk (who brought us Pay-Pal and SpaceX), is the most exciting automotive development in many decades and a marquee story of American technological dynamism and innovation. The company’s luxury electric cars have caused a sensation in the auto industry, including a review by Consumer Reports calling Tesla’s Model S the best car it ever tested. Despite the acclaim, Tesla faces enormous challenges Despite the acclaim, Tesla faces enormous challenges in penetrating an automotive market that has been dominated for a century by internal combustion engines. Not only must it build cars that customers …

The Tempting Of Antitrust: Robert Bork And The Goals Of Antitrust Policy, Daniel A. Crane

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Of all Robert Bork’s many important contributions to antitrust law, none was more significant than his identification of economic efficiency, disguised as consumer welfare, as the sole normative objective of U.S. antitrust law. The Supreme Court relied primarily on Bork’s argument that Congress intended the Sherman Act to advance consumer welfare in making its landmark statement in Reiter v. Sonotone that “Congress designed the Sherman Act as a ‘consumer welfare prescription.’” This singular normative vision proved foundational to the reorientation of antitrust law away from an interventionist, populist, Brandeisian, and vaguely Jeffersonian conception of antitrust law as a constraint on …

The Field In Ireland In 2014, Tom Dunne

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Repossessions are an important part of recovery in the housing market

The Constitutionality Of Consumer Privacy Regulation, Felix T. Wu

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The article argues for enhanced consumer privacy protections through improved notices and restrictions on data sharing, while addressing potential First Amendment concerns by emphasizing the commercial nature of the entities involved. It suggests that regulating commercial data practices differs from restricting individual free speech and should not face the same legal hurdles.

How Insurance Substitutes For Regulation, Omri Ben-Shahar, Kyle D. Logue

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Legal regulation of behavior requires information. Acquiring information about the regulated party's conduct, setting benchmarks by which that conduct is measured, and establishing the correct scale of payoffs for violating or following regulation are costly and require expertise and motivation. Thus, economic theories of rulemaking are often based on the relative information advantages that different regulatory bodies have and how that information can be harnessed to enhance incentives and thereby improve welfare. Government regulators, on average, do not have informational advantages. They are not paid for performance and thus may lack adequate incentives. They are not disciplined by market forces …

Consumer Subject Review Boards: A Thought Experiment, Ryan Calo

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The adequacy of consumer privacy law in America is a constant topic of debate. The majority position is that United States privacy law is a “patchwork,” that the dominant model of notice and choice has broken down, and that decades of self-regulation have left the fox in charge of the henhouse. A minority position chronicles the sometimes surprising efficacy of our current legal infrastructure.

But the challenges posed by big data to consumer protection feel different. They seem to gesture beyond privacy’s foundations or buzzwords, beyond “fair information practice principles” or “privacy by design.” The challenges of big data may …

After Class: Aggregate Litigation In The Wake Of At&T; Mobility V Concepcion, Myriam E. Gilles, Gary Friedman

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Class actions are on the ropes. Courts in recent years have ramped up the standards governing the certification of damages classes and created new standing requirements for consumer class actions. Most recently, in Wal-Mart v Dukes, the Supreme Court articulated a new and highly restrictive interpretation of the commonality requirement of Rule 23(a). But all of this pales in comparison to the Court's April 2011 decision in AT&T Mobility v Concepcion, broadly validating arbitration provisions containing class action waivers. The precise reach of Concepcion warrants close scrutiny. Our analysis suggests that following Concepcion, some plaintiffs will be able to successfully …

Cars In Chapter 13: Does Negative Equity Destroy The Jurisdiction Of The Hanging Paragraph, David G. Carlson

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Roughly speaking, the “hanging paragraph” to Bankruptcy Code 1325(a), enacted in 2005, requires that a debtor pay the full debt on any automobile acquired within 910 days before bankruptcy – a boon for car financiers. Prior to 2005 the debtor had to pay only the appraised value of the car – usually a lesser amount. But the privilege bestowed on car financiers by the hanging paragraph depends on the financier providing “purchase money” credit. About one-third of the time, however, the financier advances funds to repay a prior car loan as part of the “trade-in” of an old vehicle for …

Tying And Consumer Harm, Daniel A. Crane

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Brantley raises important issues of law, economics, and policy about tying arrangements. Under current legal principles, Brantley was on solid ground in distinguishing between anticompetitive ties and those that might harm consumer interests without impairing competition. As a matter of economics, the court was also right to reject the claim that the cable programmers forced consumers to pay for programs the customers didn’t want. The hardest question is a policy one - whether antitrust law should ever condemn the exploitation of market power in ways that extract surplus from consumers but do not create or enlarge market power. I shall …

Ability To Pay, John A. E. Pottow

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The landmark Dodd-Frank Act of 2010 ("Dodd-Frank") transforms the regulation of consumer credit in the United States. Many of its changes have been high-profile, attracting considerable media and scholarly attention, most notably the establishment of the Consumer Financial Protection Bureau ("CFPB"). Even specific consumer reforms, such as a so-called "plain vanilla" proposal, drew hot debate and lobbying firepower. But when the dust settled, one profoundly transformative innovation that did not garner the same outrage as plain vanilla or the CFPB did get into the law: imposing upon lenders a duty to assure a borrower's ability to repay. Ensuring a borrower's …

Financial Literacy Or Financial Castigation?, John A. E. Pottow

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This year, the Canadians- through their government-convened Task Force on Financial Literacy - have proudly produced, "Canadians and their Money: Building a Brighter Financial Future." Armed with 30 recommendations, its most dramatic innovation is to recommend the creation of a Financial Literacy Leader. I have been asked to provide an American perspective on this report specifically and the broader agenda of "financial literacy" more generally as a consumer welfare intervention. Let me start by acknowledging the critiques of the Canadian Task Force. For example, my Canadian colleague, Saul Schwartz, has already drafted a compelling analysis of the political economy behind …

Class Dismissed: Contemporary Judicial Hostility To Small-Claims Consumer Class Actions, Myriam E. Gilles

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I start from the view that small-value consumer claims are a primary reason that class actions exist, and that without class actions many - if not most - of the wrongs perpetrated upon small-claims consumers would not be capable of redress. It would then seem to follow that the class action device should be readily available in small-claims consumer cases. And yet, over the past decade, federal district courts have repeatedly declined to certify class actions on grounds that are specific to small-claims consumer cases. Foremost among those grounds is the notion that the federal class action rule carries within …