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The article focuses on how artificial intelligence (AI), algorithms, and big data facilitate predation and mask discrimination in consumer finance. Topics include the existing legal landscape and its gaps in addressing algorithmic discrimination, the challenges of applying disparate impact analysis and unfair, deceptive, or abusive acts or practices (UDAAP) doctrines to algorithmic lending, and the need for new burden-shifting rules in tort law to address these issues.

This study explores the drivers and consequences of consumers' voluntary information disclosure in the context of online consumer financing. Using unique secondary data from a Chinese online consumer financing company, we uncover a non‐linear relationship between borrowers' credit ratings and the quantity of voluntary information disclosure, and an inverted U‐shaped relationship between the amount of information disclosure and loan default. Specifically, low‐credit borrowers who opt for more voluntary information disclosure manifest a higher likelihood of default than those who disclose less, suggesting a strategic inclination toward information disclosure. Finally, we identify that disclosing high‐cost information reduces loan default, whereas disclosing low‐cost information increases default. Our findings enrich the existing literature on consumer information disclosure by providing insights into the underlying motivation and highlighting the applicability of signaling theory and privacy calculus theory. This has practical implications for lenders, borrowers, and regulators in overcoming barriers in online lending. [ABSTRACT FROM AUTHOR]

Due to many social problems caused by Internet consumer finance, Internet consumer finance regulation has always become one of the main concerns of governments and society. Based on a novel three-dimensional mixed strategy game matrix, this paper constructs a tripartite evolutionary game model for regulators, Internet consumer financial institutions, and consumers. In this model, we establish the dynamic replication equation of the three parties above, analyze the influence of factors on the tripartite strategy selection and discuss the stability of model equilibrium points through numerical simulation. The results show that the model will get six evolutionary stable points in Internet consumer financial regulation under different conditions. Moreover, strict regulation, verification, and contract keeping are the most ideal evolutionarily stable strategies. In addition, three critical factors affect the evolution results of the three parties, namely losses to institutions caused by loose regulation and verification, punishment for loose verification under strict regulation, and losses from breaking the contract. [ABSTRACT FROM AUTHOR]

Due to many social problems caused by Internet consumer finance, Internet consumer finance regulation has always become one of the main concerns of governments and society. Based on a novel three-dimensional mixed strategy game matrix, this paper constructs a tripartite evolutionary game model for regulators, Internet consumer financial institutions, and consumers. In this model, we establish the dynamic replication equation of the three parties above, analyze the influence of factors on the tripartite strategy selection and discuss the stability of model equilibrium points through numerical simulation. The results show that the model will get six evolutionary stable points in Internet consumer financial regulation under different conditions. Moreover, strict regulation, verification, and contract keeping are the most ideal evolutionarily stable strategies. In addition, three critical factors affect the evolution results of the three parties, namely losses to institutions caused by loose regulation and verification, punishment for loose verification under strict regulation, and losses from breaking the contract. [ABSTRACT FROM AUTHOR]

The business sector's finances have already begun to suffer as a result of decreased production and lockdowns, which have already begun to take their toll. In order to keep operations running smoothly, a significant public budget or stimulus is required to address issues such as interruptions in supply chains, difficulties in manufacturing, and paralyzed health systems. The banking and financial industry, whose prospects are related closely to those of the economy, is sure to face the brunt of the anticipated slowdown in economic development. The International Monetary Fund has reduced India's GDP growth prediction to 1.9 percent for 2020-21. There is a possibility of an increase in defaulted loans. "The downturn might potentially lead to job losses, which could put on on the retail lending books of financial institutions. The loss of revenue from tourism and the entertainment industries, amongst many other areas of business, has already damaged the economy. These and other such factors are all building up to put a burden on the economy of the whole world, which may potentially have ramifications for the next few years. The governments, central banks, and regulatory bodies in the Asia- Pacific region have each implemented their own unique set of countermeasures in response to COVID-19. These include the infusion of additional cash, loans directed at damaged companies and areas, and reductions in the policy interest rate. Additionally, it involves assistance for financial institutions in their provision of forbearance to economically viable people and companies that were negatively impacted by COVID-19. [ABSTRACT FROM AUTHOR]

Social media platforms are becoming an increasingly important site for consumer finance. This phenomenon is referred to as “FinTok,” a reference to the “#fintok” hashtag that often identifies financial content on TikTok, a popular social media platform. This Essay examines the new methodological possibilities for consumer financial regulation due to FinTok. It argues that FinTok content offers a novel and valuable source of data for identifying emerging fintech trends and associated consumer risks. As such, financial regulators should use FinTok content analysis—and social media content analysis more broadly—as an additional method for the supervision and regulation of consumer financial markets. This Essay test-drives this method using audiovisual content from TikTok in which consumers discuss their experience with “buy now, pay later,” a rapidly growing and less regulated form of fast, digital credit. It reveals tentative evidence of payment difficulties and strategic default in the buy now, pay later credit market, with attendant consumer protection risks. These insights provide a point of entry for the further study and regulation of the buy now, pay later credit market. [ABSTRACT FROM AUTHOR]

The author offers insights on the essay "Steering Loan Modifications Post-Pandemic," by Pamela Foohey and colleagues, published within the issue. Topics discussed include the possible response of consumer lenders to the proposed regulation of post-default modification agreements (PDMA), the regulatory jurisdiction of the U.S. Consumer Financial Protection Bureau (CFPB) under the Consumer Financial Protection Act (CFPA), and the financial services covered by the CFPA.

"Rent-a-bank" arrangements are the vehicle of choice for subprime lenders seeking to avoid state consumer protection laws. In a rent-abank arrangement, a nonbank lender contracts with a bank to make loans per its specifications and then buys the loans from the bank. The nonbank lender then claims to shelter in the bank's federal statutory exemptions from state regulation. The validity of these arrangements is the most bitterly contested legal question in consumer finance. The rent-a-bank phenomenon is a function of a binary, entity-based regulatory approach that treats banks differently than nonbanks and that treats bank safety-and-soundness regulation as a substitute for consumer protection laws. The entity-based regulatory system is based on the dated assumption that transactions align with entities, such that a single entity will perform an entire transaction. Consumer lending, however, has become "disaggregated," so the discrete parts of lending--marketing, underwriting, funding, servicing, and holding of risk--are frequently split up among multiple, unaffiliated entities. The binary, entity-based regulatory system is a mismatch for disaggregated transactions involving a mosaic of bank and nonbank entities. The mismatch facilitates regulatory arbitrage of consumer protection laws through rent-a-bank arrangements, as nonbanks claim favorable regulatory treatment by virtue of the involvement of a bank in parts of a transaction. Courts' attempts to address such arbitrages have resulted in an unpredictable doctrinal muddle. This Article argues that the best approach to disaggregated lending is a presumption that the privileges of a banking charter do not extend beyond banks, coupled with an antievasion principle that looks to substance over form and captures renta-bank transactions based on derivatives rather than outright sales of loans. Such an approach would create greater certainty about the legality of transactions, while effectuating both state consumer protection laws and federal bank regulation policy. [ABSTRACT FROM AUTHOR]

Using a nationwide online survey capturing detailed information on the backgrounds and practices of 654 financial planners, this study examines the associations between the use of technologies by financial planners and self-reported time spent within various stages of the six-step financial planning process. Surprisingly, in many cases, use of technology is associated with an increase rather than a decrease in time spent within various stages of the financial planning process. These results suggest that although technologies may provide efficiencies in completing certain tasks, these efficiencies do not necessarily result in net reductions in time spent within the financial planning process. [ABSTRACT FROM AUTHOR]

Almost half of India still does not have a bank account, leaving millions of Indians unable to access traditional sources of credit. For these unbanked Indians, peer-to-peer (P2P) lending platforms have become an important alternative credit source. A recent boom in P2P platforms caused the Reserve Bank of India (RBI) to create a regulatory framework for the P2P sector. This Comment seeks to address some of the issues concerning regulating an unconventional industry that provides a crucial service. First, it is argued that the RBI fundamentally mischaracterizes both the services P2P's provide, and how P2P's provide these services. The Comment then discusses challenges P2P regulation poses for the RBI, arguing that the RBI's framework both over- and underregulates P2P platforms. Finally, this Comment recommends India adopt U.S. P2P regulations, allowing for an exemption-based approach to lending. Given that alternative credit is much needed in India, this comment hopes to better tailor current regulations, in order to avoid a total regulatory overhaul. [ABSTRACT FROM AUTHOR]

Economic geographers have deployed a variety of spatial categories (e.g., scale, territory and border) to describe and theorize the spatiality of market making and marketization processes. This article supplements these accounts with insights from the work of post-structural geographers oriented toward the site. To this end, the article introduces the notion of the marketsite. Marketsites are points where heterogeneous elements are brought together and assembled in an effort to realize the conditions required for the performance of model markets and market subjectivities. Using the example of smart disclosure, the article argues that the use of disclosure labels to improve consumer decision making has transformed the point of sale and other transactional junctures into incipient marketsites—niches where various behavioral techniques are deployed to summon into being subjects who behave as if they were Homines economici. The behavioral turn in economics has focused the market-making efforts of a variety of actors on the market subject and strategic sites in people’s everyday lives where they can be guided and nudged into alignment with market models. Together such marketsites delineate a new, and largely uncharted, geography of encounter between (behavioral) economic theory and actually existing markets. Drawing on fieldwork developing and testing a fee disclosure box for a prepaid debit card, I show that the production of marketsites, where Homo economicus can survive, is a messy process that rarely succeeds. Regardless, such efforts reveal valuable insights into how the behavioral turn in economics is reshaping the spatiality of market-making processes. [ABSTRACT FROM AUTHOR]

The Great Recession was a consequence of widening inequality and the growth of a tiered financial services system, in which the rich and the poor have access to vastly different tools for wealth accumulation. The spatial organization of these dynamics created neighborhoods vulnerable to predation on behalf of subprime lenders and other fringe service providers. This project seeks to understand the reproduction of institutional marginalization in consumer finance. Results show that racially isolated neighborhoods in New York City, where subprime lending and foreclosures were common, were uniquely vulnerable during the Great Recession and were communities where check cashing outlets (CCOs) sprouted, highlighting a mechanism for the reproduction of inequality over time. CCOs cost more per transaction than a checking account—potentially totaling tens of thousands of dollars over a career. The link between widening financial services inequality and the recession’s consequences provides a strong impetus for safety net and community investment policies. [ABSTRACT FROM AUTHOR]

Using the 2007–2009 Survey of Consumer Finances panel dataset, we investigate whether and how changes in perceived income and saving motives are related to demand for household savings in the United States after the Great Recession. Households that perceive their current income as lower, relative to normal years are less likely to save than those who view that their income is the same as the reference point. This result holds only for those who experienced a significant negative income shock during the Great Recession. Among five major saving motives, saving for an emergency is an important factor in explaining the likelihood of saving. This study suggests that financial planners and educators should pay close attention to the role of households' income perception and saving motives and should account for the resulting potential psychological biases in households' saving decisions. [ABSTRACT FROM AUTHOR]

The article focuses on finance companies are nondepository financial firms whose primary business is providing debt and lease financing to consumers and businesses. Topics include the finance companies held nearly $747 billion of consumer credit and lease receivables, the finance companies are the third-largest institutional supplier of consumer credit, and the finance companies continue to account for a substantial share of residential mortgage originations.

Outstanding student loan balances totaled over $1.38 trillion as of December 31, 2017 with 11% of student loan debt over ninety days delinquent or in default. Due to half of all student loans being in deferment, grace periods, or forbearance, the actual delinquency rate is likely double the above figure. Delinquent student borrowers enrolled in some form of college education expect to improve their financial position. Instead, many find themselves unable to break even under the weight of large amounts of debt with confusing, and often misleading, repayment plans. Many blame the lending practices of student loan providers and servicers for the high student loan default rate. As the primary federal agency charged with the regulation of consumer financial markets, the Consumer Financial Protection Bureau ("CFPB") has used its enforcement powers against student loan companies that have violated federal consumer financial law while also developing rules and suggested practices to make the student loan market less treacherous for indebted students. The CFPB's regulatory and supervisory authority over consumer financial markets places the agency in a prime position to address the root causes of the high delinquency rate. This note will analyze the CFPB's efforts to remedy the student loan problem by assessing its use of enforcement powers, its published industry rules and guidance, and its use of other tools to promote a more transparent and navigable student loan market. Special attention is given to consumer relief resulting from historical enforcement actions, the CFPB's complaint collection and resolution process, and significant obstacles to effective regulation of the student loan market, including insufficient regulatory authority in the private student loan market, uncertainty concerning regulators' expectations of student loan companies, and inconsistent enforcement of consumer financial law. [ABSTRACT FROM AUTHOR]

We assert, in this article, that the joint transformation of public perception about households’ over-indebtedness and financial deregulation had important implications on the government decision to reform overall consumer credit between 2005 and 2010. On the one hand, the development of collective actions by groups of lawyers to defend borrowers from moneylenders’ abusive practices represents a source of change in the public opinion about over-indebted individuals in the context of long economic stagnation. A systematic press article analysis from 1977 to 2006 shows that the rising number of these collective actions since the early 1990s may have gradually increased the political salience of social issues related to the unsecure loan market. On the other hand, financial deregulation has been a source of change by allowing banks to enter the consumer finance market since the early 2000s. Banks entry into this market transformed the logic of complementarity among traditional consumer credit actors (Shinpan, credit card companies andsarakin) in a general context of legal consumers’ protection reinforcement. Thus, evolution of Japanese consumer finance's regulation is particularly relevant to illustrate the forces of institutional change and its consequences. [ABSTRACT FROM PUBLISHER]

We examined the effects of using bootstrap weights to account for the complex sample design in analyses of Survey of Consumer Finances ( SCF) datasets. No article published in this journal that has used the SCF has mentioned the issue of complex sample designs. We compared results obtained without weights and with application of population and bootstrap weights in a logistic regression, and found no substantial differences between the unweighted and the weighted analyses. We also compared results for an ordinary least squares regression, and found few differences between unweighted and weighted models. Unweighted regressions produced more conservative significance tests than the counterpart, and some econometricians have suggested that unweighted analyses are better for hypothesis testing. If estimation of the magnitudes of effects is important, weighted regression may be better because it produces consistent estimators. Researchers should be cautious in drawing conclusions when weighted and unweighted effects are substantially different. [ABSTRACT FROM AUTHOR]

Background: Economic inequality in the United States is extreme, but little is known about the national origin of affluent households. Households in the top one percent by total wealth own vastly disproportionate quantities of household assets and have correspondingly high levels of economic, social, and political influence. The overrepresentation of white natives (i.e., those born in the U.S.) among high-wealth households is well-documented, but changing migration dynamics suggest that a growing portion of top households may be immigrants. Methods: Because no single survey dataset contains top wealth holders and data about country of origin, this paper uses two publicly-available data sets: the Survey of Consumer Finances (SCF) and the Survey of Income and Program Participation (SIPP). Multiple imputation is used to impute country of birth from the SIPP into the SCF. Descriptive statistics are used to demonstrate reliability of the method, to estimate the prevalence of immigrants among top wealth holders, and to document patterns of asset ownership among affluent immigrants. Results: Significant numbers of top wealth holders who are usually classified as white natives may be immigrants. Many top wealth holders appear to be European and Canadian immigrants, and increasing numbers of top wealth holders are likely from Asia and Latin America as well. Results suggest that of those in the top one percent of wealth holders, approximately 3% are European and Canadian immigrants, .5% are from Mexico or Cuban, and 1.7% are from Asia (especially Hong Kong, Taiwan, Mainland China, and India). Ownership of key assets varies considerably across affluent immigrant groups. Conclusion: Although the percentage of top wealth holders who are immigrants is relatively small, these percentages represent large numbers of households with considerable resources and corresponding social and political influence. Evidence that the propensity to allocate wealth to real and financial assets varies across immigrant groups suggests that wealth ownership is more global than previous research suggests and that immigrant groups are likely to become more prevalent in top wealth positions in the U.S. As the representation of immigrants in top wealth positions grows, their economic, social, and political influence is likely to increase as well. [ABSTRACT FROM AUTHOR]

Using data from the 2013 Survey of Consumer Finances, this study evaluates the potential effect of using financial planners on household portfolio performance, which was measured by Sharpe Ratio. Results revealed that households that reported using financial planners demonstrated better portfolio performance than those that did not. This lends empirical support to claims that professional financial planning services provide value to clients. Implications for investors, financial planning professionals, and researchers are discussed. Considering the direct relation between wealth accumulation and portfolio performance, financial planners should explore ways in which to work with those with limited resources to help them realize the benefits of using financial planners and improve their portfolio performance as a result. [ABSTRACT FROM AUTHOR]

Household surveys are the source of some of the most widely studied data on consumer balance sheets, with the Survey of Consumer Finances (SCF) generally cited as the leading source of wealth data for the United States. At the same time, recent research questions survey respondents' propensity and ability to report debt characteristics accurately. his study compares household debt as reported by borrowers to the SCF with household debt as reported by lenders to Equifax using the new FRBNY Consumer Credit Panel (CCP). he borrower and lender debt distributions are compared by year, age of household head, household size, and region of the country, in total and across five standard debt categories. he authors' central finding is that the SCF and CCP debt patterns are strikingly similar. here are, however, two noteworthy exceptions: the aggregate credit card debt implied by SCF borrowers' reports is estimated to be 37 to 40 percent lower than that implied by CCP lenders' reports, and the aggregate student debt implied by the SCF is roughly 25 percent lower than that implied by the CCP. In contrast to the credit card debt mismatch, bankruptcy history is reported comparably in the borrower and lender sources, indicating that not all stigmatized consumer behaviors are underreported. [ABSTRACT FROM AUTHOR]

While many scholars have commented on the rise of consumer finance, few have sought to critically explore a largely invisible segment of this industry: the multi-billion dollar consumer data broker industry. The industry has amassed trillions of digital consumer records, or ‘big data’, that are stockpiled, analyzed, and sold. The odious under-regulation of this industry, as well as the role it plays in consumer debt and data breaches, often flies under the radar of critical social analyses. I adopt a neo-Gramscian approach to make sense of the material, historical, and social dimensions of this phenomenon. This article asks: what are the sources and nature of this industry’s power, and how does it relate to consumer debt? The analysis suggests that these systems demonstrate how financial capital can constitute certain domains of public policy. [ABSTRACT FROM PUBLISHER]

The author discusses the paper of co-authored by Kennickell entitled "Shared Understanding and Data Quality in the SCF." The author mentions that the artiicle presents an assessment of the effects of data quality of changes on the data review and the feedback processes of the interviewer for the 2013 Survey of Consumer Finances (SCF). It adds that the article of Kennickell poses the hallmarks of the approaches on the measurement of household wealth surveys.

Arthur Kennickell has contributed significantly to spreading internationally the techniques applied in the US Survey of Consumer Finances for the collection of distributional information on household wealth. In particular, euro area countries are heavily indebted to his sharing of methodological knowledge and deep expertise in the field. Indeed, this paper elaborates on how the euro area Household Finance and Consumption Survey moved forward thanks to a large extent to his transfer of knowledge and hands-on advice. [ABSTRACT FROM AUTHOR]

The Supreme Court of Japan, despite its well-known passive and conservative stance towards constitutional adjudication, occasionally shows quite a creative and liberal attitude. Recently, the Supreme Court of Japan has shown this attitude in its development of pro-consumer jurisprudence involving consumer loan cases. This development is still more noteworthy because the Supreme Court of Japan ignored the legislature's intent to overturn its previous judgments and practically wiped out a statutory provision enacted by the legislature. As a result of this development, millions of consumers could demand refunds from consumer loan companies, and consumer loan companies went into serious financial troubles, triggering massive reorganization of the industry. This article outlines this development in the consumer loan cases, examines how the Supreme Court of Japan accomplished this result, and explores the reason why the Supreme Court of Japan decided to take such a bold action. [ABSTRACT FROM AUTHOR]

The article discusses legal challenges faced by the industry of consumer Alternative Litigation Finance (ALF), and reflects on case law examining the usury charge. It provides information that ALF companies provide funds to consumers engaged in pending litigation, and also discusses several court cases including Echeverría v. Estate of Lindner, Rancman v. Interim Settlement Funding, and Oasis Legal Finance v. Suthers. It evaluates the efficacy of the framework currently utilized by courts to assess whether usury law properly governs ALF transactions. The multi-factor test infers that ALF advances are investments, not loans. It suggests that courts should adopt a tailored version of multi-factor test of tax law for a meaningful examination of the usury challenge to ALF.

The specter of the loan shark is often conjured by advocates of price deregulation in the market for payday loans. If binding price caps are imposed, the argument goes, loan sharks will be spawned. This is the loan-shark thesis. This Article tests that thesis against the historical record of payday lending in the United States since the origins of the quick-cash business around the Civil War. Two different types of creditors have been derided as "loan sharks" since the epithet was first coined. One used threats of violence to collect its debts but the other did not. The former has been less common than the latter. In the United States, the violent loan sharks proliferated in the small-loan market after state usury caps were raised considerably and these loan sharks dwindled away as a source of credit for working people before interest-rate deregulation began to be adopted at the end of the 1970s. The other type of loan shark thrived both when usury ceilings were very low and when they were very high or even removed. Deregulation does not starve the nonviolent species of loan shark into extinction but instead feeds it. Hence the loan-shark thesis is seriously flawed. It does not accord well with the historical record of the market for payday loans. [ABSTRACT FROM AUTHOR]

The article presents an examination of the impact of the United States' Uniform Small Loan Law (USLL) of 1907-1930 and discusses the role the Russell Sage Foundation (RSF) played in bringing about the passage of the USLL. It discusses issues related to the law, including the high rates of interest that were associated with the small loan business and the benefits and drawbacks of making credit available to poor and working people. Additionally, the article examines why some states passed the law much more quickly than others.

Alarming global trends in consumer debt have remained a subject of interest for many decades. Despite literature being replete with studies on the subject, the role that information intermediaries play in influencing financial rationality of consumer credit decisions has remained unexplored. This article presents a perspective that is being proposed for the first time. It is proposed that the rationality of consumer credit decision in an economy is determined by the combined effect of a most commonly used primary financial information intermediary and the propensity for consumers to rely on the advice of a primary financial information intermediary. This perspective of analyzing consumer debt acquisition is instrumental to policymakers, consumer lobbyists, and marketers. [ABSTRACT FROM AUTHOR]

Presents an update on consumer credit and payments in the U.S. as of the 1st quarter of 2006. Differences between the objectives of private providers and payment services and the Federal Reserve System; Credit contract choices of consumers; Expectations of consumers to minimize borrowing costs.

This article focuses on the problem of consumer credit. A certain number of consumers cannot or will not pay their bills on time or at all. It is this situation which makes unselected credit an expensive and even impracticable proposition. The disadvantages of a credit business may be summed up in one word, expense. Those interested in the marketing structure of the U.S. have long noted the high percentage of consumer goods which are purchased by women, a percentage running in many cases to 75 per cent or more. It is also a curious fact that some persons who handle their own business affairs with ability and profit, as far as the particular job or position may be concerned, seem to keep their personal finance and budget-making in a logic-tight compartment. It may be pointed out that the consumer class, as a whole, may expect to profit from a more efficient selection of risks on the part of the merchant. The granting of credit means, after all, that the retail merchant agrees to loan capital to individuals for a long or short time, and frequently without other security than a vague open account arrangement.

Examines the Uniform Small Loan Law drafted by the Russell Sage Foundation and enacted in 25 states of the U.S. Act requiring the licensing of all lenders making loans of $300 or less at more than the legal contract rate; Provisions indicating that the Act sufficiently protects the borrower and provides for effective supervision.