Banks Providing Payday Loans

It seems at least Wells Fargo is now offering payday loans, though they call theirs a "direct deposit advance." (See Wells Fargo FAQ).  A large number of states prohibiting payday loans and an even larger number opposed to any federal charter for payday lenders.  (see Center for Responsible Lending).  It seems that some lenders are turning to setting up shop on the Internet, states that allow these loans or even in foreign countries.  (see Major Banks Aid in Payday Loans, New York Times).  While there is plenty to dislike about this product, how its marketed, the price, etc., there are also complaints against major banks that have been permitting withdrawals on these loans, even where the loans are illegal in the first place. 

Customers should be able to discontinue automatic withdrawals of any variety by a simple request to the bank.  Banks that don't comply with customer requests do so that their own peril.  Notice of a stop payment would seem to make any further transactions not properly payable under section 4-401 and prohibited under the Electronic Funds Transfer Act at the very least. There are some reports that the banks truly are attempting to increase overdraft fees by forcing customers on the edge to continue making auto-withdrawlas over a stop payment request.  While I am not surprised that banks might overreach at times, customer persistence may help to stomp this out.  Or at least an industrious attorney or law student who is able to remind banks of the rules of Article 4 and Regulation E under the Electronic Funds Transfer Act 205.10 (allowing customers to stop payment).

-JSM

Yet another entrustment case. Buyer wins.

It seems there with regularity appear cases that well illustrate the "entrustment" doctrine, often concerning artwork that falls into ownership by a buyer in the ordinary course.  UCC section 2-403 governs the rights of buyers in the ordinary course who receive the goods from a merchant dealing in goods of the kind, even where the merchant did not have authorization to sell from the actual owner of the goods.  Application of this section was at issue in the case of Joseph P.Carroll Ltd. v. Baker concerning ownership of the painting Untitled (1943) by John D. Graham (“the Painting”).  Craig Baker (“Baker”) purchased the Painting in a private sale, but later consigned the Painting with a third party gallery owned by Lawrence Salander (“SOG”) for sale.  In 2000, John P. Carroll Ltd. (“Carroll”) expressed an interest in the Painting but did not purchase it from SOG until 2007.  Four months after the sale, Baker discovered the sale and confronted SOG; however SOG had declared bankruptcy in the interim and, consequently, Baker was not paid for the painting.  Applying section 2-403, the court determined that Baker entrusted the painting to SOG, a merchant.  Because Carroll was a buyer in the ordinary course that purchased the Painting in good faith and without knowledge of the rights of Baker, SOG effectively transferred all of Baker’s rights to the painting to Carroll. Therefore, Carroll held title to the painting.  See also Lakes Gas Co. v. Clark Oil Trading Co., 875 F. Supp. 2d 1289, 1305–06 (D. Kan. 2012) (finding that summary judgment precluded where there were genuine issues of material fact as to whether Lakes effectively entrusted its propane to Stevenson to sell to third parties, as to whether Clark Oil comported with usual or customary practices in buying propane from Stevenson, and as to whether Clark Oil qualified as a buyer in the ordinary course within meaning of the section 2-403).

While indeed this is a harsh result to the former owner of the painting, the message is that those who entrust valuable objects to others should look into filing a Financing Statement in the proper office to protect the interest.

                                                                                                   -JSM

 

Thanks to Frank Synder and Texas Wesleyan

I'd like to echo Meredith Miller's thanks over at Contracts Prof Blog and add my own to Professor Frank Synder and Texas Wesleyan School of Law for hosting the Eighth International Contracts Conference this past weekend.  I am pleased to announce that St. Thomas University School of Law will host next year's conference February 21-22, 2014 in lovely Miami.  So, save the dates for a great weekend of paper presentations and contract (and often commercial) law discourse.  We will start accepting paper and panel proposals in the coming months when the Call for Papers is announced.

More to come on this soon.

                                                                                                                                     -JSM

Revolving door of contract terms?

At the International Contracts Conference, there was plenty of references and discussion of companies changing terms and conditions whenever they see fit to do so (see AT&T litigation; Apple).  AT&T readily notes that it changes terms "from time to time.  as does Apple.   As another example, Facebooks' multiple terms and conditions changes have resulted (see, e.g.,  new instagram changes), like AT&T, more than a bit of grumbling from users. 

So, is there anything to be done about this?  Seems not.  A contract just isn't what it used to be in terms of mutual assent it appears.  Now we all agree to an agreement that allows unilateral modification.  I am hardly convinced that consumers actually agree to this, but the overreaching of sellers in is well documented.  Pete Seeger once said, “Education is when you read the fine print. Experience is what you get if you do not.” It seems now, it might not matter whether we read the fine print terms or not.  Hardly encouragement to read these darn provisions.

Other than suing the seller, consumer options seem limited.  When Facebook, Inc. made its debut as a publicly traded company, and changed its terms and conditions, some Facebook users attempted to creatively try to block resuse of profile content.  Basically, the users began posting status updates citing provisions from the Uniform Commercial Code in order to protect their content. The notice, in part, read:

By the present communiqué, I hereby notify Facebook that it is strictly forbidden to disclose, copy, distribute, disseminate, or take any other action against me on the basis of this profile and/or its contents. The aforementioned prohibited actions also apply to employees, students, agents, and/or any staff under Facebook’s direction or control. The content of this profile is private and confidential information. The violation of my privacy is punishable by law (UCC 1-308, 1-103, and the Rome Statute).

Commentators did not seriously believe that posting this notice on a Facebook page would have any legal impact on privacy. Moreover, the Uniform Commercial Code is not really implicated here.  It is hard to see how the UCC really helps, as much as I admire those who wield its provisions by section number.  The bottom line is that one cannot take back what they have already consented to, even if the consent is to an ever changing set of terms. Specifically, all users when opening their accounts agree to Facebook’s Statement of Rights and Responsibilities (SRR). Contained within the SRR are the site’s privacy policy and its terms and policies. By opening their account and clicking the “sign up” button, all users have accepted these terms and stated they have read these policies. Therefore, one cannot alter their acceptance to these policies nor can they restrict the rights of entities who are not parties to that agreement by posting a contradictory legal notice on their page. 

While the Facebook user tactic has no teeth to it, it represents an ever present issue that consumers will face concerning terms and conditions, particularly those that companies can, and do, change frequently.  All without any additional consent. 

 

                                                                                                       - JSM and Raymond Alvarez

The High Price of Law School

Good news for law students?  There has been much in the news about the increasing student loans nationwide, the high cost of law school and the downturn in applications.  So, could there be some good news from the "taxman?"  Enter the LifetimeLearning Tax Credit (LLTC) available on tax returns for tax year 2012.  The credit, processed on IRS Form 8863, along with the American Opportunity Tax Credit, are targeted toward students.  The LLTC appears, unlike others, to apply to those obtaining graduate-level education.

So, what is the deal when your students come by to ask as mine did?  The Lifetime Learning Tax Credit consists of a maximum of $2,000 or 20% of the qualifying education expenses.  These expenses must be paid to any post-secondary education, including graduate schools, and they constitute tuition and fees, course-related books, supplies, and equipment that are required as a condition for enrollment.  Even a new laptop may qualify if documentation can be provided that the school requires it! Anyone who pays -even with borrowed funds- expenses for higher education (being undergraduate or graduate education), -either for him, a spouse, or a dependent- may claim the credit.  As always, there are income limitations, set at $61,000, or if filing jointly (which is required if married), $122,000. 

The expenses count for the year in which they are paid, not for the academic year for which they are paid.  For example, if tuition is paid in the Fall of 2012 for the Spring semester of 2013, it constitutes the expenses of 2012. Also, the expenses must be reduced by any amount paid for classes that a student withdraws, as well as for any tax-free educational assistance received such as some scholarships and fellowships.  For example, if $10,000 is paid in tuition, a $2,000 credit (10,000 x .20) may qualify, assuming no other education tax credit was claimed such as the American Opportunity Credit.  However, if the claimant was reimbursed for any of the previous reasons, or the student received a tax-free scholarship, the amount of expenses of $10,000 would be reduced and 20% calculated from it.

 So, when they come by and complain about the high cost of law school, books and the dearth of jobs, perhaps the bright spot might be a $2000 tax incentive.  Hmmm, be sure to mention it. 

                                                                                                                         - JSM and Rosario Torres

No Contract?

Professor  Oren Bar-Gill (NYU) has been busy of late!  Not only was he a presenter at the International Contracts Conference in Texas Wesleyan in Ft. Worth, Texas, this past weekend, and has a new book "Seduction by Contract: Law, Economics and Psychology in Consumer Markets," he has a new paper "No Contract?" on SSRN taking up the issue of no contract arrangements, where consumers opt-out of long term relationships with providers.  Yet another interesting paper in my stack to read.

                                                                                                                                     - JSM

Promising "Reads" in Contract Law

The Eigth International Contracts Conference is now done, but a report on yesterday's panels is worth noting.  The presentations included a panel on Are Consumer "Contracts" Contracts? with Oren Bar-Gill (NYU), Jean Braucher (U Arizona), David Horton (UC-Davis) and Margaret Jane Radin (U Michigan) as presenters.  The focus of this discussion was Professor Radin's book "Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law" (Available on Amazon for $30.40 and Kindle $19.25).  I haven't read it yet, but after hearing the panel, a number of those in the audience ordered it.  The Wall Street Journal did a book review for it and Professor Horton will post a review on SSRN soon.  The book gives a historical view of the dreaded boilerplate language for any who aren't already drawn in by the issues and then turns to a discussion concluding what many already know: there are serious defects with consent to boilerplate under classic contract doctrine.  Of course, restricting boilerplate has its problems as well in a society depending on speedy transactions that are not individually negotiated.

Another panel focused on Professor Bar-Gill's book "Seduction by Contract: Law, Economics and Psychology in Consumer Markets" (Available on Amazon for $32.50 and $19.24 on Kindle).  Professor Bar-Gill takes up specific instances of long-term consumer contracting (cell phones, mortgages, credit cards, etc.) and grapples with consumer short term philosophy toward their own prospects and the market that ultimately allows sellers to secure less favorable long-term deals.

I look forward to reading these soon.

                                                                                                                                     - JSM

Greetings from the Eighth Annual International Contracts Conference

Two days of great discourse on contract law is being held at the Annual International Conference on Contracts, the schedule for the Eighth International Conference on Contracts, coming up this weekend, is available here.  Of note, yesterday's speakers included Neil Sobel's (Texas Wesleyan) presentation on Attacking Zombie Debts highlighted the perils of resurrected debt to consumers.  Fernando Dias Simoes' (University of Macao) presentation on Professionals v. Consumers: Should SME's be Treated at Laymen? argued that regulatory structures should include in some contexts small and medium business entities in consumer protection regimes.  I look forward to seeing both of these papers on SSRN soon.

Today's presentations include a panel on Are Consumer "Contracts" Contracts? with Oren Bar-Gill (NYU), Jean Braucher (U Arizona), David Horton (UC-Davis) and Margaret Jane Radin (U Michigan) as presenters.

If you are not here in Ft. Worth, you are missing some great talks.  The Conference's Lifetime Achievement Award went to Dr. John Murray.  Next year's Conference will take place on February 21-22, 2014 at St. Thomas University in Miami, Floida.  Hope you will join us!

                                                                                                                                           -JSM

SSRN Recently Submitted Papers in Journal of Consumer Law eJournal

RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of Consumer Law eJournal
December 24, 2012 to February 22, 2013

Rank	Downloads	Paper Title
1	498	Law School Marketing and Legal Ethics Ben Trachtenberg, University of Missouri School of Law, Date posted to database: December 21, 2012 Last Revised: January 4, 2013
2	380	Choice of Law in the American Courts in 2012: Twenty-Sixth Annual Survey Symeon C. Symeonides, Willamette University - College of Law, Date posted to database: January 13, 2013 Last Revised: January 14, 2013
3	276	Arbitration and Access to Justice: Economic Analysis Omri Ben-Shahar, University of Chicago Law School, Date posted to database: January 6, 2013 Last Revised: January 10, 2013
4	223	The Politics of Twitter Data Cornelius Puschmann, Jean Burgess, Humboldt University of Berlin - School of Library and Information Science, Queensland University of Technology, Date posted to database: January 25, 2013 Last Revised: January 25, 2013
5	178	Award as an Investment: The Value of an Arbitral Award or the Cost of Non-Enforcement Loukas A. Mistelis, Centre for Commercial Law Studies, Queen Mary University of London, Date posted to database: January 7, 2013 Last Revised: January 7, 2013
6	153	The Law of Friction William McGeveran, University of Minnesota Law School, Date posted to database: December 20, 2012 Last Revised: December 20, 2012
7	151	The Consumer Financial Protection Bureau: An Introduction Adam J. Levitin, Georgetown University - Law Center, Date posted to database: January 12, 2013 Last Revised: February 5, 2013
8	141	The HOB-Vín Judgment: A Failed Attempt to Standardise the Visual Imagery, Packaging and Appeal of Alcohol Products Alberto Alemanno, HEC Paris - Law Department, Date posted to database: January 13, 2013 Last Revised: January 13, 2013
9	141	Discrimination in Online Ad Delivery Latanya Sweeney, Harvard University, Date posted to database: January 29, 2013 Last Revised: January 29, 2013
10	139	The Economics and Regulation of Network Branded Prepaid Cards Todd J. Zywicki, George Mason University - School of Law, Faculty, Date posted to database: January 23, 2013 Last Revised: January 23, 2013 - JSM