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Recent years have seen the dramatic growth of Buy Now, Pay Later (BNPL), a class of unregulated fintech products that permit consumers to finance purchases by dividing payments into several interest-free installments. BNPL presents novel regulatory challenges because it is primarily marketed to consumers as an interest-free alternative to credit, and its distinctive market structure is characterized by lender–merchant agreements that promote financing at the point of sale. In the American context, the Consumer Financial Protection Bureau (CFPB) has announced plans to analogize treatment of BNPL to existing credit card regulations, which generally emphasize disclosure requirements. Though undoubtedly an improvement over the unregulated status quo, this regulatory response is hardly a panacea to the industry’s risks, as it would not account for the crucial role that merchants play in driving the industry or the fact that consumers often do not even view BNPL as credit in the first place. This Note proposes a novel framework for the regulation of BNPL under the CFPB’s rulemaking authority to regulate actions undertaken by both lenders and merchants in promoting BNPL financing to consumers. This approach would provide the CFPB with the flexibility to ensure that regulations continue to stay abreast of developments in the market and the necessary tools to calibrate consumer financial protection to a landscape that is increasingly shaped by fintech. [ABSTRACT FROM AUTHOR]

As a result of restricted lending following the recent financial crisis, implementation of the 2009 Credit Card Accountability, Responsibility and Disclosure (CARD) Act, and widespread changes in credit card issuers' policies and fees, the U.S. "credit landscape" is changing. Consumers and their financial advisors need to know the new rules of the road. This article discusses seven key credit topics that financial service professionals need to know: consumer debt-to-income ratios, saving versus debt repayment decisions, credit scoring, credit card selection criteria, credit card fees and traps, CARD Act regulations, and cultural competence and credit. [ABSTRACT FROM AUTHOR]

The article reports on the developments made in the field of credit cards in the U.S. Topics discussed include enactment of Credit Card Accountability Responsibility and Disclosure Act of 2009 for regulating the same; efforts of Consumer Financial Protection Bureau in protecting consumers; and Expressions Hair Design v. Schneiderman court case on the same.

On May 18, 2017, the U.S. Court of Appeals for the First Circuit, in United States v. Hillaire, joined the Fifth, Sixth, and Eighth circuits in holding that the government's act of scanning the magnetic stripes of lawfully seized credit, debit, or gift cards to access the information encoded therein is not a search within the meaning of the Fourth Amendment. In each case, the courts concluded that an individual is precluded from claiming a reasonable expectation of privacy in the electronic information encoded on a card's magnetic stripe. This Note provides an overview of how Fourth Amendment jurisprudence has evolved in light of advances in technology and introduces the current standard by which courts determine whether governmental conduct amounts to a Fourth Amendment search. This Note goes on to argue that both existing precedent on Fourth Amendment search determinations and the technological realities of the modern world should allow an individual to claim a reasonable expectation of privacy in this information. Accordingly, scanning the magnetic stripe of a card to access its encoded information should be considered a Fourth Amendment search. [ABSTRACT FROM AUTHOR]

The Department of Justice's theory of liability in its case attacking the non--discrimination provisions in American Express's merchant contracts contends that point--of--sale competition on the price of making a purchase with a credit card is an instrument creating economic efficiency. That is, the economy would run more efficiently, and consumers would be better off, if merchants were free to charge variable prices for different types of credit cards. After all, charging different prices for using different types of payment mechanisms appears to be just another form of presumptively positive price competition. The Second Circuit rejected that conclusion, recognizing that in credit card markets competition already occurs at multiple points. American Express must compete to: • convince cardholders to apply for and use its cards; and • convince merchants to accept its cards. The question, the Second Circuit correctly recognized, is whether adding a third type of competition -- for cardholders to use the card when merchants pass through their card acceptance fees -- would make American Express's card network more efficient? By prohibiting merchants who accept American Express cards from discriminating against the brand, the card company imposed a unilateral vertical restraint. Such restraints are often deemed to be reasonable under the antitrust laws because they may "stimulate inter--brand competition." This is because an upstream provider, like American Express, has little interest in reducing its downstream sales. It would only impose a vertical restraint if that restraint efficiently helped it to sell more products. Only when an upstream or downstream provider has market power enabling it to impose restraints that harm consumers by raising price or lowering quality does a vertical restraint violate the antitrust laws. The Department of Justice's theory postulated that the non-- discrimination provisions in American Express's merchant agreements harmed consumers by effectively requiring merchants to increase their prices to cover higher credit card fees for all customers because merchants could not pass the cost of accepting American Express directly to American Express's own customers. The Second Circuit acknowledged the potential for consumer harm would exist if American Express charged merchants supra-- competitive prices and pocketed the excess as rents. But the court held that the government failed to prove that rivalry on the price consumers pay to use a credit card at the point of sale would increase efficiency in credit card markets. As the Second Circuit explained, credit card markets are two--sided. In order to prove harm to consumer welfare in a two--sided market, an antitrust plaintiff needs to show that a restraint makes the overall system less efficient. That is, do consumers overall pay more for less because of the restraint. A card network like American Express must compete for both cardholders and merchants. One therefore cannot demonstrate that price increases on one side of the market are inefficient without examining how those prices impact competition on the other side of the market. American Express argued that it used increased revenue from the merchant side to offer a better card product to its cardholders and compete more effectively with other card networks, like Visa, for cardholder loyalty. The Second Circuit did not definitively decide whether American Express's non--discrimination provisions were pro-- or anticompetitive. It simply concluded that two--sided market economics made the question more complex than the government plaintiffs acknowledged in trying the case. And based on the record evidence, the court couldn't tell whether the non-- discrimination provisions made the market more or less efficient. Since the plaintiff bears the burden of proving harm to competition, i.e. a reduction in efficiency to the overall market, the government plaintiffs had failed to prove their case. Part I reviews the economics of two--sided markets and provides reasons to conclude that non--discrimination provisions in credit card markets are efficient. Part II explains that a market's two-- sided nature does not guarantee that participants in that market will charge competitive prices. Card systems with market power could set merchant fees at supra--competitive levels, leaving the market less efficient. This Part then contrasts Visa's and MasterCard's fees in the 1990s and early 2000s--which were challenged by merchants in a class action--with American Express's current fees. It concludes that the factors giving the merchants a plausible case against Visa and MasterCard do not support the government plaintiffs in their case against American Express. Part III addresses a systemic concern expressed in a recent New York Times editorial about how a decision in American Express's favor might impact the future enforcement of antitrust claims against dominant firms. This Part concludes that those concerns are unfounded. The Sherman Act has two principle sections. Truly dominant firms would remain subject to scrutiny under Section 2 of the Sherman Act, and Section 1 vertical restraint cases already require proof of consumer harm no different from what the Second Circuit required in its decision favoring American Express. [ABSTRACT FROM AUTHOR]

The Second Circuit ruled that American Express did not have market power because it operated in a two-sided market and any leverage it exercised over merchants derived from its successful competition for cardholders. As a result, the relevant market had to include both sides of a credit card transaction, the company's market share was modest, and it could not exploit both merchants and cardholders. In Market Power and Antitrust Enforcement (forthcoming in B.U. L. REV.), I propose a new approach that infers market power from the likely effects of the challenged conduct. This approach shows that American Express clearly exercised market power. Its conduct prevented merchants from steering customers to cheaper credit cards and thus maintained merchant fees above the competitive level. I also explainwhy these high fees were not justified by the rewards programs the company provided to its cardholders. [ABSTRACT FROM AUTHOR]

The contract age of majority is currently age eighteen. Contracts entered into by minors under this age are generally voidable at the minor's option. This contract doctrine of capacity is based on the policy of protecting minors from their own poor financial decisions and lack of adultlike judgment. Conversely, the age of eighteen is currently set as the arbitrary age at which one will be bound to her contract, since this is the current benchmark for becoming an "adult." However, this Article questions the accuracy of age eighteen for this benchmark. Until comparatively recently, the age of contract majority had been twenty-one for centuries. The age was reduced to eighteen in the aftermath of protest over the military draft of eighteen-year-olds during the Vietnam War during the 1960s and 1970s, and the enactment of the Twenty-Sixth Amendment which lowered the voting age from twenty-one to eighteen. However, the appropriate age for the military draft bears little to no relation to the appropriate age for voting, or contracting. Moreover, other evidence points in the direction of age twenty-one as a more appropriate age of majority. First, scientific evidence of brain development has advanced to the point that we now know the brain does not stop developing until well into the twenties, which means the powers of cognition and decision-making are not fully developed until then. Second, sociological evidence suggests that most people do not perceive the full attributes of adulthood as having been reached until at least twenty-one, if not older. Third, other areas of the law have experiences in coming back to age twenty-one as an appropriate marker of adulthood--these include the age for purchasing alcohol, the age for obtaining a credit card, and soon (it appears) the age for purchasing cigarettes. This confluence of evidence suggests that the contract age of majority was always appropriately set at age twenty-one, and a return to that age of capacity for contracts will correct a historical misstep in the law. [ABSTRACT FROM AUTHOR]

The article reports on legal developments relating to the regulation of product characteristics in the field of marketing in the U.S. The author discusses product warranties issued after the Magnuson-Moss Warranty Act in relation to product standard regulations. The disclosure of warranty terms is also discussed. Information about a trade regulation associated with product quality in the used automobile industry is included. A U.S. Federal Trade Commission regulation concerning consumer protection within the credit industry is also mentioned.

We study a new law that restricts credit to individuals under age 21.We first use a difference-in-difference approach to estimate the effect of the law on credit card availability. Following the passage of the law, individuals under age 21 are 8 percentage points (15%) less likely to have a credit card, have fewer cards, and, conditional on having a card at all, are 35% more likely to have a cosigned card. We then use data from before the passage of the law to identify the characteristics of those individuals most likely to be affected by the Act. [ABSTRACT FROM AUTHOR]

The article examines the provisions of the federal 2009 Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) in the U.S., which regulates businesses that operate gift card programs, as well as the state statuses called baby-CARD acts. Among the major things that businesses should be aware of are cash value refunds, dormancy fees, and expiration dates. Also examined are the gift card rules concerning the relationship between the issuer and the holder.

In the lead up to the financial crisis of 2007-2009, federal banking regulators failed to keep large national banks in safe and sound condition while allowing them to engage in lending practices that exploited vulnerable consumers. Measures have been passed in recent years to reign in the most egregious consumer abuses of financial institutions. Nevertheless, "hidden" credit card fees and service charges remains an area of banking practice that has the real potential to seriously harm consumers and weaken our national economy. Measures such as the 2009 CARD Act do not go far enough in protecting American consumers from unfair, deceptive, and abusive credit card lending practices. This Note reviews how, prior to the financial crisis, federal preemption, coupled with a lax and fragmented federal regulatory system, shielded national banks from state-law-based enforcement actions that might have otherwise curbed abusive and unsound credit-extending practices. The Note suggests a way in which various provisions of the Dodd-Frank Act can work together to provide a stronger, more comprehensive regulatory regime covering credit card fees and service charges. The proposed scheme is designed so that state governments--which are best positioned to act as consumer financial protection advocates-- can effectively spearhead the effort to combat consumer credit card abuse and is intended to reach unfair, deceptive, and abusive credit card practices that have until now mostly escaped the gamut of federal banking regulation. [ABSTRACT FROM AUTHOR]

The article discusses U.S. credit card and freedom of speech laws in relation to the anti-surcharge (anti-swipe fee) statutes that have been enacted in American states which forbid merchants from adding surcharges for customers who use credit cards to pay for goods and services. State laws in places such as California are examined, along with anti-surcharge law-related cases in the U.S. Eleventh Circuit Court of Appeals such as Dana's Railroad Supply v. Attorney General, State of Florida.

The article focuses on the structure of credit-card network with the class-action settlement between financial services companies Visa and MasterCard and the adjudication and regulation of related credit-card fees in foreign countries.

The article examines the legislative framework of the U.S. and Australia related to consumer credit grant. Topics discussed include comparison of Australian and American regulation concerning to authorize use of, or increase the credit limit of credit cards; information on regulatory framework to control payday loans; provisions of several acts related to lending such as Dodd-Frank Act, the Australian National Consumer Credit Act and Credit Card Accountability Responsibility and Disclosure Act.

The article discusses how to improve cardholder repayment patterns in America as of 2015, and it provides an analysis of the minimum-payment and 36-month disclosures which are mandated by the U.S. Credit Card Accountability Responsibility and Disclosure Act of 2009 Act (CARD Act). Behavioral biases and consumer attitudes towards credit cards are mentioned, along with the problems that are associated with consumer credit card debt in America. The U.S. Congress is also examined.

The article looks at the decision of the Supreme Court of Canada in the case Bank of Montreal v. Marcotte in which court ruled for the bank's failure to disclose a foreign exchange conversion fee to credit card customers. It mentions the class action brought under the provisions of the Consumer Protection Act of Canada. It also mentions the role of the law of contract for the consumer protection of banks' customers.

The article focuses of publication of several European Union regulations in official journal. Topics discussed include regulation on Long-Term Investment Funds (ELTIFs) for stimulating economic growth and employment; regulation on use of credit, debit and universal cards in transaction of interchange fees, launching of public consultation by EU Commission on European Market Infrastructure Regulation's (EMIR) implementation and publication of insolvency proceedings' recast regulation.

The article discusses the proposed amending of the U.S. Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) in order to meed the needs of young consumers in America, and it mentions the problems associated with college student indebtedness. Higher education costs and credit card-related responsibility are mentioned, along with consumer protection laws in the U.S. Financial illiteracy, predatory marketing, and prescreened credit card offers are examined.

The article focuses on settlement without consent in multi-district class action In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation related to credit card system merchant acceptance fees which prohibited U.S. Federal Rule of Civil Procedure 23(b)(2) and antitrust law.

This Essay explores the effects of stored-value cards on social welfare. We argue that stored-value cards, in general, are socially beneficial payment devices. Their burgeoning use benefits society in three main plains. First, by replacing paper-based instruments in market segments previously inaccessible to card-based payments, stored-value cards lower the private and public costs of payment transactions. Second, by extending the use of card-based payment systems towards lower- and middle-income households, stored-value cards foster inclusion of those households in the financial mainstream of our society. Third, by operating without an extension of credit, stored-value cards help to limit the uniquely American reutilization of credit transactions associated with the widespread use of credit-card borrowing. We further identify several risks associated with the use of stored-value cards. First, as in many cases their issuers are not federal banks, storedvalue cards expose consumers to the possibility of losing funds in the case of issuer's insolvency. Second, as their mechanism is vulnerable to data breaches, they expose consumers to unauthorized uses of their funds-- as opposed to other payment cards inhere consumers enjoy regulatory protection on this matter. Third, they raise the issue of the unused funds remaining on the card after most of it has been depleted. We recommend policies that will foster the use of stored-value cards, while adopting several rules that will confine their associated risks. We therefore call for adequate supervision that will assure the availability of deposits insurance to most stored-value cards; an extension of the current unauthorized use rules to stored-value cards; and a mechanism that will allow cash out of small unused funds associated with those cards. We also emphasize the need to exempt from regulation small stored-value cards programs in order to foster their beneficial use in contexts where the risks of harm are slight. [ABSTRACT FROM AUTHOR]

The article focuses on debit card user protection under the U.S. Electronic Fund Transfer Act (EFTA) and the U.S. Truth in Lending Act (TILA). Topics include the differences between credit and debit cards, the rate of credit card fraud in the U.S., and the allocation of losses. Information is provided on debit card protection in 2014.

This Article explores the fundamental failure of Congress ' twenty-five-year quest to utilize disclosure as the primary tool to both regulate credit card issuers and educate consumers. From inception until present, reforms to this disclosure regime, even when premised on judgment and decision-making behavioralism, were nomothetic in orientation and ignored clear differences in population behavior and the heterogeniety of consumers. Current law prohibits credit card issuers from acquiring consumer socio-demographic data and prevents issuers and regulators from using market and policy experimentation to enhance disclosure's efficacy. To explain why this regime was structured this way and why it must change, this Article contains four key sections: (1) a comprehensive review of the creation of our modern consumer credit card regilatory scheme; (2) a survey of the empirical evidence used to update and expand that disclosure-centered regime over twenty-five years; (3) an account of why the existing scheme's disclosure function substantially fails, notwithstanding recent reforms; and (4) an argument that to achieve optimal credit card disclosure efficacy, the law must permit issuers to acquire and utilize customer socio-demographic information, including race, gender, and other characteristics [ABSTRACT FROM AUTHOR]

The article offers information related to credit card market in the U.S. as of December 2013. Among the issues that were discussed include the consumers' behavior and experiences with their credit cards, and the implementation of consumer protection regulation Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit Card Act. Information on the February 2012 survey by the Thomson Reuters/University of Michigan Surveys of Consumers are also provided.

It has been shown recently that both card networks' profits and consumer welfare are higher when the networks charge proportional fees than when they charge fixed per-transaction fees. In this paper, we reexamine this result in a market characterized by free entry. We find that private profitability is not always compatible with consumer welfare maximization: while card networks always benefit from the use of proportional fees, consumer welfare may get reduced. A simple calibration exercise confirms that a proportional fee could harm consumers under reasonable parameter values. [ABSTRACT FROM AUTHOR]

The article discusses the role of the Civil Court administration of New York City in handling the third party debt collector credit card cases. It discusses various issues related to the cases including erroneous judgments, uneven administration of justice, and unrepresented consumer defendants. It mentions that financial crisis and recession have resulted in consumer credit transaction legal problems with credit cards.

This Article contributes to an ongoing debate, afoot in academic, legal, and policy circles, over the future of consumer arbitration. Utilizing a newly available database of credit card agreements, the Article offers an in-depth examination of dispute resolution practices within the credit card industry. In some respects, the data cast doubt on the conventional wisdom about the pervasiveness of arbitration clauses in consumer contracts and the presence of unfair terms. For example, the vast majority of credit card issuers do not utilize arbitration clauses, and by the end of 2010, the majority of credit card debt was not subject to such an agreement. Likewise, while the use of class waivers is widespread in arbitration clauses, most clauses lack the sort of unfair procedural terms for which arbitration is often criticized. The upshot of these and other findings is that consumers, in some respects, have more choice in their contracts than the literature suggests. Our work also responds to the suggestions of some scholars that businesses favor arbitration clauses in their consumer contracts but not their business-to-business agreements. On the contrary, our research suggests that the difference may not be as dramatic as previous research suggests. These results hold important implications for ongoing policy debates, including the proposed Arbitration Fairness Act pending in Congress as well as the work of the newly minted and controversial Consumer Financial Protection Bureau (CFPI3). Our findings suggest that the Arbitration Fairness Act may be based on faulty empirical premises and that the blanket prohibition contained in the Act may be overbroad. Our findings also provide a model that the CFPB might follow in conducting its statutorily required study of the use of arbitration clauses in consumer financial services contracts. [ABSTRACT FROM AUTHOR]

The article focuses on a lender's liability for merchant misconduct in consumer transactions. Topics include the legal terms contained in sales contracts, the use of credit in consumer transactions, and open-ended credit plans. Information is provided on the merchant's relationship with the credit card issuer.

The article presents a summary of various legal developments regarding remittance transfers, credit cards, and prepaid cards in the U.S. as of November 2012, focusing on the nation's Bureau of Consumer Financial Protection (CFPB) and issues related to the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, credit card fee regulations, and prepaid gift cards. The U.S. Electronic Fund Transfer Act and the Uniform Commercial Code are also mentioned.

The article discusses the U.S. Congressional enactment of massive regulations on the financial services industry in the U.S. due to the economic recession in 2007. Topics include regulation of the credit card market through the U.S. CARD Act, consideration of the independent income of the person instead of full household income for issuing the credit card, and not issuing the credit card to the non-income-earning spouses according to the ability to pay rule by the Federal Reserve Board.

We take a fresh look at the concerns about credit card pricing and empirically investigate whether the Credit CARD Act of 2009 (the CARD Act) has been successful in addressing those concerns. The rational choice theory of credit card pricing, which posits that issuers use back-end fees to adjust the price of credit to reflect new information about borrowers' credit risk, predicts that issuers will respond to the CARD Act by using alternative ways to price risk. In contrast, the behavioral economics theory, which posits that issuers use back-end fees because they are not salient to consumers, predicts that issuers will respond by increasing unregulated nonsalient prices. If the market is competitive, we argue that the CARD Act should also result in increases in some salient, up-front prices. But we show that if issuers have market power, reductions in nonsalient fees may not result in concomitant increases in salient charges. We test these predictions using two datasets on credit card contract terms before and after the CARD Act rules went into effect. We find that the rules have substantially reduced the back-end fees directly regulated by the CARD Act, including late fees and over-the-limit fees. However, unregulated contract terms, such as annual fees and purchase interest rates, have changed little. Post-CARD Act, consumers continue to face high long-term prices and low short-term prices, and imperfectly rational consumers still have difficulty understanding the cost of credit card borrowing. We thus consider potential improvements to the regulatory framework. We argue that improved disclosures that provide consumers with the aggregate cost of credit under the contract, based on information about the borrower's likely use of credit, would improve consumer outcomes. Furthermore, we suggest that regulators should not focus only on prices that are "too high" but should also consider limiting the ability of issuers to charge introductory teaser interest rates that are, in a sense, "too low." [ABSTRACT FROM AUTHOR]