Articles Posted in Consumer Law

UC Davis Law professor Vikram David Amar discusses the U.S. Supreme Court’s recent decision in Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America, Ltd., which upheld the constitutionality of the CFPB’s funding scheme, and examines the role of “history and tradition” in the Court’s constitutional jurisprudence. Professor Amar argues that while relying on post-enactment traditions to interpret the Constitution raises complex questions, especially in the context of originalism, such traditions may be more defensible when determining the scope of individual rights as opposed to structural provisions like separation of powers and federalism.

UC Davis Law professor Vikram David Amar discusses a recent Supreme Court decision holding that the Consumer Financial Protection Bureau’s (CFPB) funding mechanism, which draws money from the Federal Reserve System rather than yearly congressional appropriations, does not violate the Constitution’s Appropriations Clause. Professor Amar argues against the view expressed in a Wall Street Journal op-ed that this ruling could turn into a “stunning defeat” for the CFPB due to the Fed’s recent operating deficits, asserting that the Court’s decision merely rejects the Appropriations Clause as a basis to challenge the CFPB’s funding and does not affirmatively rely on that Clause to justify the Bureau’s operations.

Cornell Law professor Michael C. Dorf discusses President Joe Biden’s commentary on “shrinkflation” during his State of the Union address, particularly Biden’s call to pass legislation to combat this deceptive practice where companies reduce the product size while maintaining the price. Professor Dorf explains why he agrees with the need to address shrinkflation but critiques Biden’s focus on junk food examples, arguing that consuming fewer unhealthy products might not harm consumers. Additionally, Professor Dorf highlights a broader issue of consumerist populism and the inconsistency in addressing economic policies and environmental challenges.

NYU law professor Samuel Estreicher and adjunct professor Zachary Fasman comment on the U.S. Supreme Court’s decision earlier this week in NCAA v. Alston, in which the Court held that the NCAA’s attempt to limit compensation to student athletes to preserve their amateur status is subject to the normal rule of reason analysis applied in antitrust cases. Professors Estreicher and Fasman note that the effect of conflicting and competing state name, image and likeness (NIL) regulation on the consumer market—the market at the core of the Court’s analysis in Alston—remains to be seen.

BU Law emerita professor Tamar Frankel explains the law of preemption as it pertains to broker-dealers and their investor clients. She predicts, among other things, that either the clients will demand that broker-dealers adhere to a fiduciary duty, or else that states will impose that duty on them.

BU Law emerita professor Tamar Frankel discusses the Securities and Exchange Commission (SEC)’s Regulation Best Interest (BI), which imposes on broker-dealers a commitment to act in the best interests of their clients. Specifically, Frankel addresses the SEC’s treatment of client waivers of the Regulation BI, which goes even further than general fiduciary law to prohibit any waiver of the broker-dealer’s conflicting interests.

BU Law emerita professor Tamar Frankel discusses an emerging issue affecting financial advisers—when a client may exercise control over the actions of the adviser. Frankel relates the story of an investment adviser that did not follow the client’s orders to cease certain investments, at a cost of almost $5 million to the client. As Frankel explains, the Securities and Exchange Commission (SEC) got involved, resulting in the investment adviser’s settlement for a significant payment to the client and other conditions.

BU Law emerita professor Tamar Frankel describes two advertisements by Charles Schwab ostensibly praising independent investment advisers, who are fiduciaries. Frankel explains why this development may lead to a separation of advice from execution of trade in a way that offers greater protections to investors.

Cornell law professor Sherry F. Colb comments on a battle over what products may carry the label “milk.” Colb proposes that the dairy industry opposes plant-based milks (such as soy milk or almond milk) from identifying their products using the word “milk” not because of any real risk of confusing consumers or market harm, but as a show of dominance in response to exposed vulnerability.

BU Law emerita professor Tamar Frankel dissects a manipulative email message purporting to offer a once-in-a-lifetime investment opportunity. Frankel explains why the message is effective at deceiving many recipients and cautions investors to be wary of similar advertisements.

BU Law emerita professor Tamar Frankel offers some suggestions to investors about how to avoid being scammed by sophisticated con artists. Frankel points out that even sophisticated investors sometimes fall victim to complex and enticing schemes and dissects a few examples of advertisements for such schemes to illustrate her points.

Guest columnist and UC Hastings adjunct professor Samuel R. Miller considers whether Amazon is violating antitrust laws if it is (as is alleged) misusing data it obtains from third-party transactions. Miller explains two potential theories of antitrust liability—the “essential facilities” doctrine and the “monopoly leveraging” theory—and discusses the extent to which Amazon might be liable under each theory.

BU Law emerita professor Tamar Frankel discusses the dangers of allowing non-government entities—such as Facebook and its affiliates—to issue a “basket” of crypto-currency. Frankel explains the importance of government regulation of currency and cautions that we should seek a clearer understanding of any technology or currency that can potentially destabilize the nation’s economy.

Cornell law professor Sherry F. Colb comments on Tyson Foods’ recent entrance into the meat reduction market, selling so-called blended products that contain both meat and plants. Colb discusses some of the possible harms and benefits of Tyson’s decision from the perspective of an ethical vegan consumer.

BU Law emerita professor Tamar Frankel explains how seemingly small hidden transaction fees can add up to a significant cost to the investor, particularly in long-term investments. Frankel explains that strictly literal interpretations of the regulations of broker-dealers lead to this unfair and costly result for investors and argues that society should focus on reinforcing brokers’ fiduciary duties of care (expertise) and loyalty (avoiding conflicts of interest).

BU Law emerita professor Tamar Frankel argues that while private ordering—that is, rules of behavior without the backup of law—works well in some situations, such as among diamond traders and farmers, it cannot work in other situations, including the financial system. Frankel provides a brief review of the literature on private ordering and explains why the financial system cannot work under this model, and indeed why applying it would cause dangerous trends and damaging consequences.

BU Law emerita professor Tamar Frankel comments on the renewed importance of the repealed Glass-Steagall Act which Congress passed after the failure of the financial system in the 1920s. Frankel argues that the alarming path of Wells Fargo Bank supports imposing regulations on banks similar to those levied by the Glass-Steagall Act.

Cornell law professor Sherry F. Colb considers the significance in policing “original” meanings of words, such as “meat” and “marriage.” She point out that in both contexts, arguments over the meaning of the word are rooted in strong feelings about status and do not truly reflect a concern with a risk of confusion.

BU Law emerita professor Tamar Frankel discusses Ponzi schemes, explaining how they work and why the con artists are able to deceive victims. Frankel also describes what we might learn from studying con artists and their victims.

BU Law emerita professor Tamar Frankel explains why state regulatory bodies should impose fiduciary duties on broker-dealers, whose services involve both “sales talk” and the managing of securities of investors who often lack knowledge or expertise of the transactions. Frankel reiterates points she made during testimony before the New Jersey Bureau of Securities and makes the case for the long-overdue regulation of broker-dealers as fiduciaries.