Table of Contents

Payday Loan Rollovers and Consumer Welfare

Jennifer Priestley, Kennesaw State University

The Enforcers & the Great Recession

Mark Totten, Michigan State University College of Law

Ethical Issues in Big Data Health Research

Mark A. Rothstein, University of Louisville - Institute for Bioethics, Health Policy, and Law, University of Louisville - Louis D. Brandeis School of Law

Constitutional Reasoning in Private Law: The Role of the CJEU in Adjudicating Unfair Terms in Consumer Contracts

Oliver H. Gerstenberg, University of Exeter, Program in Law and Public Affairs, Princeton University

Betwixt and Between: Regulating the Sharing Economy

Abbey Stemler, Indiana University - Kelley School of Business - Department of Business Law

Advertising in a Free Society

Arthur Seldon, Independent
Ralph Harris, Institute of Economic Affairs (IEA) - UK
Chris Snowdon, Independent


CONSUMER LAW eJOURNAL

"Payday Loan Rollovers and Consumer Welfare" Free Download

JENNIFER PRIESTLEY, Kennesaw State University
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Using payday-lender administrative data matched to borrower credit attributes from a national credit bureau, I find that borrowers who engage in protracted refinancing (“rollover�) activity have better financial outcomes (measured by changes in credit scores) than consumers whose borrowing is limited to shorter periods. These results are robust to an alternative definition of a “rollover� that ignores out-of-debt periods of 14 days between successive loans. Also, exploiting interstate differences in rollover regulation, I find that, while regulation has a small effect on longer-term usage patterns, consumers whose borrowing is less restricted by regulation fare better than consumers in the most restrictive states, controlling for initial financial condition. These findings directly contradict key assumptions about this market, raise significant policy questions for federal regulators, and suggest the appropriateness of further study of actual consumer outcomes before the imposition of new regulatory rollover restrictions.

"The Enforcers & the Great Recession" Free Download
Cardozo Law Review, Forthcoming

MARK TOTTEN, Michigan State University College of Law
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No one played a more vital role responding to the worst economic crisis since the Great Depression than a small band of state attorneys general (AGs). Yet this story has never been told nor its implications considered. For more than a decade these AGs brought enforcement actions across the residential mortgage lending industry, reaching the origination, servicing, and securitization processes. From roughly 2000 to 2008, they targeted several of the largest subprime lenders for predatory and discriminatory lending. And they moved in the face of federal inaction — at times, even opposition. With the economic crisis everywhere visible by early 2009, they turned toward abuses in mortgage servicing and securitization. While they often collaborated with their federal counterparts during this time period, these AGs continued to lead and shape the enforcement agenda.

This narrative demonstrates that states are integral to the task of consumer financial protection. Congress was right to empower states in the Dodd-Frank Act of 2010 by scaling-back preemption and giving the AGs concurrent enforcement powers. The AGs not only serve as a stopgap when federal regulators fail to act, but they alter the quality of enforcement in positive ways not replicated by even engaged federal regulators. The marks of AG enforcement include information advantages; agility; a remedial focus; resistance to capture; and entrepreneurialism. Moreover, these events also suggest a new enforcement model in the area of consumer protection that may sometimes prove more efficient than earlier approaches: the multigovernment, multiagency action. And while these observations concern consumer financial protection in the first instance, they also have implications for ongoing conversations about federalism and enforcement.

"Ethical Issues in Big Data Health Research" Free Download
Journal of Law, Medicine and Ethics, Vol. 43, No. 2, 2015 Forthcoming

MARK A. ROTHSTEIN, University of Louisville - Institute for Bioethics, Health Policy, and Law, University of Louisville - Louis D. Brandeis School of Law
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Big Data involves analyzing huge data sets for unexpected associations. As a form of health research, Big Data techniques promise interesting new hypotheses. This article addresses whether traditional research regulations should apply to Big Data, explores the relationship between privacy and autonomy in Big Data health research, and considers the role of informed consent in Big Data health research.

"Constitutional Reasoning in Private Law: The Role of the CJEU in Adjudicating Unfair Terms in Consumer Contracts" Free Download

OLIVER H. GERSTENBERG, University of Exeter, Program in Law and Public Affairs, Princeton University
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This article explores the — often controversial — role of the CJEU as an interpreter of Directive 93/13/EEC on unfair terms. A fundamental problem any modern system of private law must address is how to combine two types of provisions: those that are intended to facilitate private ordering through voluntary transactions; and those setting out certain mandatory terms that are intended to protect vulnerable consumers against risks inherent to free market transactions. In the European social market, this fundamental problem is exacerbated by the fact that the EU does not have a private law system of its own but a multilevel system that must operate in close cooperation with national legal systems. This article argues that, in response to the failure of various legislative initiatives, the Court's jurisprudence has acquired both a regulatory dimension and a constitutional dimension. The emergent judicial regime illustrates an important departure from a rule-­based conception of private law, based on private autonomy as a stand-­alone value, towards an innovative conception which extends proportionality analysis into substantive private law but avoids one-­sided outcomes.

"Betwixt and Between: Regulating the Sharing Economy" 

ABBEY STEMLER, Indiana University - Kelley School of Business - Department of Business Law
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Airbnb, Uber, Eatwith, and other sharing economy platforms facilitate short-term rentals, transportation, meals, and even pet sharing. These “sharing economy� companies are part of what is also called “collaborative consumption� or “the peer-to-peer economy.� The companies in the sharing economy use technology to connect people who have private excess capacity to those who want to purchase it. Rather than staying in a hotel, customers can stay in a spare bedroom through Airbnb; rather than hiring moving companies, customers can get help moving via TaskRabbit; rather than going to a restaurant, customers can have a meal prepared for them in someone’s home via Eatwith.

TIME Magazine listed the sharing economy as one of the ten ideas that will change the world, and Forbes estimates that the revenue flowing through the sharing economy will surpass $3.5 billion in 2014, with growth exceeding 25%. At that rate, peer-to-peer sharing is moving beyond a fringe movement and becoming a disruptive economic force. Look only to Airbnb, which at six years old has a valuation of $13 billion, much higher than the Hyatt hotel chain ($10 billion), and Uber, which at four years old has a valuation of $40 billion, greater than Hertz, Avis, and Enterprise combined.

Companies using this relatively new business model have faced innumerable legal challenges. In some places, platforms are simply banned from operating; in others, supply-side users or the platforms themselves are punished. The reason for the difficulty and uncertainty is that the sharing economy is in a “betwixt and between space� — it does not fit within existing legal frameworks. Platforms view themselves as online companies regulated by Internet law, though they execute mostly in the offline world. Furthermore, sharing economy platforms are facilitating transactions that have always been legal, but are now executed on such a large scale that the potential for harm to the public is very real. What are the rules when the lines blur between giving a friend a ride to the airport and operating as a professional driver?

This paper argues that existing laws cannot effectively regulate the sharing economy, because the sharing economy is uniquely comprised of individuals profiting from their personal excess capacity. These individuals operate microbusinesses, which cannot, without devastating consequences, be regulated like traditional businesses. The paper proposes a new framework for regulators that will support the benefits of the sharing economy while still achieving regulatory goals such as fraud prevention, safety, revenue, risk allocation, and fair competition.

"Advertising in a Free Society" Free Download
Institute of Economic Affairs Monographs, Hobart Paper 176

ARTHUR SELDON, Independent
RALPH HARRIS, Institute of Economic Affairs (IEA) - UK
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CHRIS SNOWDON, Independent

In practice it is impossible to distinguish between advertising that is intended to be persuasive and advertising that is intended to be informative. Persuasive advertising normally has information content and even basic information provided by a company about its products will normally be intended to make consumers more interested in the product.

Advertising is more likely to reduce, rather than increase, costs and prices. Advertising increases the extent of the markets in which companies are able to operate, therefore leading to greater economies of scale. This is confirmed by the empirical evidence.

Advertising effectively subsidises the press and broadcast media.

It is a mistake to regard advertising as a waste of resources which, if it were regulated, could be eliminated. Businesses have to transmit information about products in one way or another. If they did not advertise, they would have to find other – probably more expensive – ways to do this.

There is no evidence that advertising creates monopolies. Indeed, if anything, advertising increases competition by improving information to consumers.

Advertising is less of a reflection of corporate power than of corporate vulnerability. Advertising tends to be used by established companies as a way of building brand loyalty.

The evidence suggests that advertising is not manipulative in any meaningful sense. It is not an important determinant of consumer behaviour, though it can help build brand loyalty. Certainly, advertising does not effectively contrive ‘wants’ in the way suggested by critics such as J. K. Galbraith.

All serious studies of the advertising of alcohol and tobacco suggest that it has the same impact on the overall consumption of these products as on the consumption of any other product: none. This is a conclusion that is at odds with the assertions of political campaigners.

An attack on advertising is, in effect, an attack on free speech. While commercial free speech may not be valued as highly by some as other forms of free speech, it should, nevertheless, be defended as an important principle.

Ironically, though it is politicians who are responsible for any prohibition or limitation of advertising, it is advertising by politicians themselves that Harris and Seldon found to be systematically and incorrigibly dishonest.

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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.

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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

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

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

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IAIN D. C. RAMSAY
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