Table of Contents

State Automobile Franchise Laws: Public or Private Interests?

Thomas Randolph Beard, Auburn University - Department of Economics
George S. Ford, Phoenix Center for Advanced Legal & Economic Public Policy Studies

Mandatory Financial Education as Prerequisite to Personal Insolvency Relief: The North American Experience

Jason J. Kilborn, The John Marshall Law School, Radboud University Nijmegen

Impact of Foreclosure Laws on Mortgage Loan Supply and Performance

Tien Foo Sing, National University of Singapore (NUS) - Department of Real Estate
Yonglin Wang, National University of Singapore (NUS)
Daxuan Zhao, Renmin University of China - School of Business

Debt in Just Societies

John Linarelli, Durham University

Constitutionalizing Class Certification

Margaret S. Thomas, Louisiana State University - Paul M. Hebert Law Center


CONSUMER LAW eJOURNAL

"State Automobile Franchise Laws: Public or Private Interests?" Free Download
Phoenix Center Perspectives No. 16-06

THOMAS RANDOLPH BEARD, Auburn University - Department of Economics
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GEORGE S. FORD, Phoenix Center for Advanced Legal & Economic Public Policy Studies
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First, we address the claim that state auto franchise laws are protectionist and thus serve primarily private rather than public interests by comparing the evidence presented to support this view to the theoretical predictions from economic theory and what we know about car markets. We conclude that the evidence presented does not provide much support for a protectionist slant on these laws. Second, we evaluate the competing claim that the independent dealer serves an important role for consumers. Using a Nash bargaining model that is motivated by accepted facts about auto sales, we find that there are consumer benefits of state laws requiring independent sales of automobiles — primarily, lower prices for consumers. Indeed, we find that a consumer motivation for these laws has good support and appears to be most consistent with the available evidence.

"Mandatory Financial Education as Prerequisite to Personal Insolvency Relief: The North American Experience" Free Download
LA PREVENCIÓN DEL SOBREENDEUDAMIENTO PRIVADO. HACIA UN PRÉSTAMO Y CONSUMO RESPONSABLE (Matilde Cuena Casas, ed., Thomson Reuters Aranzadi 2017 Forthcoming)

JASON J. KILBORN, The John Marshall Law School, Radboud University Nijmegen
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This chapter from a forthcoming volume on prevention of overindebtedness explores mandatory financial education in consumer bankruptcy. Requiring individual debtors to undergo such counseling or education as a prerequisite to discharge relief is a seemingly sound idea in a vain search for compelling theoretical and empirical support. The North American experience provides neither. Canada since 1992 and the United States since 2005 have both required individual debtors to receive financial management counseling or training pre-discharge, even though available evidence of the causes of consumer bankruptcy and evaluations of the education provided strongly suggest that this mandate is not filling a real need. Sound theory and reliable evidence strongly suggest that it is unjustified to mandate financial management training for those seeking relief from personal financial distress, which results most often from unforeseen accidents of life, not lack of basic financial knowledge or mismanagement. The ultimate question is whether the significant costs of mandating financial education are justified by its limited and likely illusory benefits.

"Impact of Foreclosure Laws on Mortgage Loan Supply and Performance" Free Download

TIEN FOO SING, National University of Singapore (NUS) - Department of Real Estate
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YONGLIN WANG, National University of Singapore (NUS)
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DAXUAN ZHAO, Renmin University of China - School of Business
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This paper measures the impact of three types of defaulter-friendly foreclosure laws on the behaviors of mortgage lenders in loan origination, and borrowers in default decision. To disentangle the “pure? influence of foreclosure laws from that of unobserved regional factors, we use the border identification strategy to sort the loan sample in the zip codes on both sides of a border dividing states by the foreclosure laws adopted. Unlike the previous research, we find no conclusive evidence on the causal effects of foreclosure laws on loan supply and default risk. The empirical results are highly sensitive to fixed effect specifications, time period, and sample selection.

"Debt in Just Societies" Free Download

JOHN LINARELLI, Durham University
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A post-Great Recession consensus has emerged that persons, firms, banks, and governments should deleverage and that access to credit should be restricted. The article deals with legal and policy solutions to the dilemma that debt presents to societies: successful societies benefit from a substantial infrastructure of consumer, commercial, corporate, and sovereign debt but debt can cause substantial private and social harm. Pre- and post-crisis solutions have seesawed between subsidising and restricting debt, between leveraging and deleveraging. Unsophisticated solutions restrict debt without accounting for the risk of harm to persons least able to bear the risk, worsen pre-existing inequalities, destroy or impair the net worth of households, and impose unfavourable distributive consequences. This article offers normative tools to assist policymakers in developing institutions to take criteria other than economic stability into account, but which do not undermine the aim of economic stability. I argue for access to credit architecture that is responsive to equality concerns. I advocate a luck egalitarian approach, a responsibility-catering form of egalitarianism offering policymakers options to take the debtor’s choice and desert into account while still accounting for cognitive mistakes people often make in debt decision making. More sensitivity to equality concerns in law and policy should lead to developing incentives to promote hybrid instruments to relax the rigidity of debt. It should also lead to discouraging, on moral grounds, law and policy relying primarily on private debt to finance the public goods features of mixed public-private goods.

"Constitutionalizing Class Certification" Free Download
Nebraska Law Review, Forthcoming

MARGARET S. THOMAS, Louisiana State University - Paul M. Hebert Law Center
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While class actions have been in decline in federal mass tort litigation since at least the 1990s, a quiet shift has been occurring in their landscape in state courts. Although most scholarly attention has been focused on federal courts and on the U.S. Supreme Court’s reworking of Federal Rule of Civil Procedure 23 in the aftermath of the Class Action Fairness Act, state supreme courts have been engaged in a little-noticed but tremendously important battle over the future of class certification.

Defendants in non-removable class actions in state courts have increasingly shifted their arguments against class certification from objections based on procedural rules to objections based on the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution. These arguments have different variations and forms (sometimes about punitive damages within class actions, and sometimes about the kind of evidence or proof courts must consider). This Article brings these varied due process arguments together to reveal their interconnectedness. It argues that a fundamental shift is underway in how state courts are being asked to think about class certification, based on a major expansion of procedural due process doctrine.

This Article contributes a new perspective on the boundaries of procedural due process in class certification by contextualizing that doctrine with the state courts’ functional role as independent adjudicatory systems. It concludes that state courts’ procedural independence in devising their own class certification systems is best served by the pragmatic, flexible view of procedural due process that has prevailed since the middle of the twentieth century; however, that functional role is imperiled by efforts to nationalize class certification procedures by constitutionalizing them.

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About this eJournal

This eJournal distributes working and accepted paper abstracts of articles, recently published articles, books, legislative reports, conferences, and other publications that address issues of interest to consumer law scholars and practitioners. Coverage includes legal issues pertaining to advertising, consumer reporting (including credit repair organizations), discrimination (including redlining), consumer disclosure (such as the Truth in Lending Act, the Real Estate Settlement Procedures Act, and consumer leasing), consumer fraud (including issues arising under the Federal Trade Commission Act, state UDAP statutes, odometer laws, referral sales, and bait and switch statutes), unconscionability, standard form contracts, consumer privacy (including telemarketing, spam, spyware, phishing, direct mail, financial privacy, common law privacy torts in consumer transactions, and online privacy), identity theft, data protection, cooling off rules (including door to door sales regulation), payment systems (such as credit and debit cards, internet payment issues, stored value cards (including gift cards and phone cards), and electronic transfers), warranties (including UCC warranties, lemon laws, and the Magnuson-Moss Warranty Act), consumer product safety, commercial speech doctrine, debt collection, repossession, predatory lending (including asset-based lending, equity stripping, flipping, balloon payments, negative amortization, loan packing, rate-risk disparities and yield-spread premiums), payday lending, usury, credit insurance, electronic shopping (including electronic signatures and records, formation of contracts, and payments), the holder in due course regulation, mortgages, student loans, repossession, foreclosure, regulation that pertains to consumer markets and enforcement of consumer laws (including class actions, preemption, arbitration, administrative enforcement, small claims courts and attorney's fees). The eJournal does not cover landlord-tenant issues or criminal law. The eJournal welcomes a broad range of methodological approaches, including conventional doctrinal analyses, law and economics approaches, historical discussions, socio-legal analyses, law and society approaches, discussions of consumer psychology that bear on legal issues, international law analyses and comparative law approaches.

Editor: Jeff Sovern, St. John's University

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Advisory Board

Consumer Law eJournal

RICHARD M. ALDERMAN
Associate Dean, Director - Consumer Law Center, Dwight Olds Chair in Law, University of Houston Law Center

JEAN BRAUCHER
Roger Henderson Professor of Law, University of Arizona - James E. Rogers College of Law (deceased)

MARK ELLIOTT BUDNITZ
Professor of Law, Georgia State University College of Law

MICHAEL M. GREENFIELD
George Alexander Madill Professor of Contracts and Commercial Law, Washington University in Saint Louis - School of Law

ALVIN C. HARRELL
Professor of Law, Oklahoma City University - School of Law

CREOLA JOHNSON
Professor of Law, Ohio State University - Michael E. Moritz College of Law

DEE PRIDGEN
Associate Dean and Professor of Law, University of Wyoming College of Law

IAIN D. C. RAMSAY
Professor of Law, University of Kent, Canterbury - Kent Law School

RALPH J. ROHNER
Professor of Law, Catholic University of America - Columbus School of Law

NORMAN I. SILBER
Associate Dean for Intellectual Life and Professor of Law, Hofstra University School of Law