I propose "the bigger the print, the stronger the statement". Therefore, if you make one claim in 24 point and then attempt to rescind or modify it in 8 point, the 24 is legally binding because it was larger and so nullified the smaller. This also means that if you want to place limitations (like 'one per customer' etc) on an offer you make in print, those will have to be printed in an equal font in order to be valid.
More seriously, I think first amendment protections for commercial speech are too generous. Game theory tells us that perverse incentives will often win out, and while it's tempting to fall back on caveat emptor it's also a cop out. The reality is that the huge and increasing information asymmetry between organizations and individuals leads inevitably to inequitable outcomes; further, it's entirely predictable that by swamping the recipient of a contract with reading material they'll just go ahead and agree to it because it's not obvious that it will be worth the effort of analysis. I can't remember the last time I read a EULA, and I like reading contracts and legal documents.
Free business idea: a fiduciary AI that parses contracts, simplifies contractual terms for maximum clarity, and rates contracts on their adherence to/deviation from industry norms.
Consider the following three statements.
Consent cannot exist when the information asymmetry becomes too great.
The information asymmetry between a massive corporation (as compared to some mom and pop shop) and an individual consumer is great enough to invalidate consent.
We allow and legally enforced consent between these entities (with very limited exceptions; even things like arbitration clauses tend to be binding).
One of the above statements cannot be true for us to be moral in our actions, yet all three seem true. I honestly have a moral issue with how this all works, even though I'm not sure how to fix it and recognize a fix may completely change how we do business.
As far as I understand, many clauses will then be automatically invalid if they are too one-sided for the company. Also maximum durations of contracts are greatly restricted while certain standards for contract cancellation rights are enforced.
[1] https://en.wikipedia.org/wiki/Standard_form_contract#Contrac...
99.9% of the casino adds have to show people sad about losing - before we get 1 winning ad
"Visit Golden Palace photo of a roulette wheel for a 46% chance of breaking even!"
I figured that adjusting say 8% of the ads to reflect an (imaginary) 8% incidence of problem gambling would actually be more effective, by balancing the legitimate commercial desires of the casino, the legitimate worry of gambling addiction, and making the billboards just unpredictable enough to keep people playing...er, guessing.
The EU has a ton of regulation like that.. For example you can't say "free" if it's associated with a subscription or other tricks. You must advertise the complete price if selling phones with binding subscription, etc..
IMO, there is still many shady business practices to kill. But the EU is doing a great job at this.
--- Good luck in the US, maybe you should just start by targeting the payday loan industry... But not sure the current President is going to help Elizabeth Warren fix anything.
Basically, if your contact/agreement is not upfront about the downsides then those are nullified.
Sadly, people might still decide to do it. Definitely seems like usury laws would apply.
Most of the legal agreements - customer/consumer usually lose because of the super vague and often-in-favor of the company providing the loan/service.
I am not sure if you meant font size literally.
I dunno, why wouldn't it be okay? I interact with a lot of companies on a day-to-day basis; big ones (Facebook, Google), small ones (the corner shop I bought an energy drink at on my way to work), and everything in between.
Offhand I'd say that none of them have a legal expectation to work in my best interest, nor would I have expected any of them to, nor do I believe a law requiring them to would be workable.
My interest in buying an energy drink is to get the brand I wanted at the lowest possible price; the store's interest is in selling it to me at the highest possible price. If they had to work in my best interests would they be required to sell it to me at cost? Maybe I drink too many energy drinks, would they be required on pain of criminal sanctions to try and talk me into buying some fruit juice instead? The mind boggles. :)
Or do you think there's something special about this particular product that makes it different than every other good or service in the economy? Or that their very vague ads somehow set up a special relationship that's more akin to a doctor/patient relationship than the borrower/lender relationship one would expect from, you know, a loan company?
But we don't have any laws or expectation that a food vendor is going to be acting in my best interests. If I want to spend my rent money on 87 large pepperoni pizzas, nobody is going to arrest the guy who took my order because he didn't sit down and have a 30 minute session with me to ensure that my order was in my best interests, fit within my budget, and would improve my life. All we do is make sure that I 1) have the money 2) get my pizzas and 3) they aren't poisonous or mislabelled.
The difference between "you can't blatantly lie" and "you have a fiduciary duty to act in your client's best interests" is enormous.
They are a servicer, not a lender -- they are contracted by the lender to collect the money from the borrower. So the borrowers never asked to be customers of Navient. They borrowed some money from a bank or the government, who then contracted Navient to service the loans.
Now servicing loans is like owning an interest only bond -- you get a small payment every month as long as the loan is paying. When you own servicing rights, what you want to do is for payments to drag on for as long as possible -- since you don't get the principal, having the loan pay early is the second worst thing that can happen.
Now its very possible that Navient is doing things which are not in the interest of either the borrower or the lender, but are in the interest of Navient. And it's likely perfectly legal.
But again many of these loans are not just simple transactions in the marketplace, but rather subsidized social programs, where the government in promoting the program has a reasonable expectation that some part of this subsidy should fall to the borrower, and is reasonable frustrated when a provider whom they have hired tries to prevent this.
IF SO, that seems like a damning indictment of the government and the contracts they have drawn up then?
If you're trying to run some sort of soft touch social program where maximising the amount collected isn't your primary goal, then obvious the ONE thing you shouldn't do is then outsource managing it to a private company who gets paid based on their ability to maximise the account collected. Right? Given that's the one thing the government could do most likely to undermine their goals?
If you want happy borrowers, sign a contract with Navicent that pays them based on their NPS score. :)
If Navient wrote "call us and we'll screw you" then that would be fine as the customer would get what exactly what they were promised.
> However the pizza restaurant also doesn't have anything about helping you make good, long-term financial decisions plastered all over it's website.
Basically, people tend to think "false advertising" is fraudulent, even if that is not true from a legal perspective.
The difference is that we have drawn a line beyond which that company cannot operate by passing a law that bans certain practices, and the CFPB is alleging Navient violated that law.
Navient may well have such a duty. :)
Because that's the default rule when it comes to arm's-length transactions in the economy? Unless there is a special relationship (e.g. doctor-patient), everyone takes care of their end of the transaction. The government offers very generous loan repayment options for student borrowers. It's Navient's job to collect payments, which helps keep the whole system solvent and lowers interest rates for other borrowers. Why should it be its job to help borrowers figure out their repayment options?
I don't see how this should be any different from the relationship a fiduciary has with his/her client.
Can we make this happen?
Are you suggesting that when people signed for the loan - which was not with Navient, as they're on the servicing and collections side - that they didn't know what the terms of repayment would be?
Whether the collections is outsourced or insourced, your average student borrower isn't planning on having their life's trajectory fall apart. They aren't expecting the hardships that lead them to need remediation. However many warnings you provide them on the front end, it's at the time of crisis that they need advice and guidance. Navient has been horribly negligent and predatory in this regard. Anyone taking on the job of preferred collector of gov't loans should be required to act in the interests of the borrowers - aka the American public.
Navient should pay what the court compels it to if outright deception is found, but let's not overstate their role in the general problem around the structural non-sustainability of federal education loans, and the short-sightedness executive decision to spin off the liabilities into private hands.
If someone doesn't take the time to understand their student loans, which are one of the most important things in their lives at that age, I just don't know what to say.
I always look up the terms of any loans I take, including student loans, car loans, credit cards, etc. Honestly, is that too much to expect?
Let's say an honest lending start-up rushes to fill this niche and then rejects people's applications based on imperfect academic record, lack of summer jobs or internships (so potential laziness), subpar math skills and very minimal knowledge of foreign languages (so indicative of poor information retention). It also honestly tells you that art history majors have no place in a business world, and honestly maybe a career in plumbing is a better fit.
This is just based on their model, and the rejection is worded in a nice, legally safe and sound, way.
How long before such lender is being sued into oblivion for discriminatory practices?
However, looks like such practices are not considered discriminatory by law.
> Two federal laws, the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA), offer protections against discrimination. The ECOA forbids credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or whether you receive income from a public assistance program.
"Let people know what they're getting into." was intended to refer to the whole loan process, but specifically (in Navient's case) to the remediation options they present, and how they present them. That could include things like: 1) Guiding borrowers towards income-based repayment rather than deferment or forbearance, and 2) Recommending external options such as re-financing or consolidation where possible and advantageous.
From what I understand, I don't think that the US government is generous at all with their student borrowers. Yes, they allow more flexibility around repayment options than do many other lenders. However, the government has largely eliminated the option of personal bankruptcy [1] for student loans. So, they're really just as complicit in this mess as the for-profit colleges and the loan collection agencies.
[1] http://www.nolo.com/legal-encyclopedia/student-loan-debt-ban...
Because their customer who is paying them to service the loans wants them to.
If you advertise that you're going to help people deal with their debt better, then that should be legally binding (regardless of what your fine print says), and a failure to do so should at the very least be illegal under false advertising laws, and I'd say more reasonably it should be considered breach of (implied) contract.
(IANAL, so clearly my terms are not meant in a strict legal sense, because I have no idea what I'm talking about.)
Presumably, they want the option to steer you towards their in house funds that have the highest fees instead of helping you het the max return on your investment.
shareholder capitalism. they have zero accountability except to their shareholders.
Random thought that just came to mind. Have coalition of debt holders (borrowers ) ever considered buying stock in these companies to influence them in the form of another company that is jointly owned or invested in by thousands or tens of thousands of folks?
Eg, mass activism campaign launches request for everyone to invest X% of what they normally would have paid into loans for the month (above the minimum thresholds of course), and/ or y% of disposable income into this fund. Now obviously one or ten people doing this will own just a few hundred stocks, but thousands doing this get tens of thousands of stocks-- thats when it could get interesting ;)
Obviously, would not be available to those really struggling under massive loan burdens and struggling to make every payment, BUT for those in the AND gate between reasonably high loan burden and comfortable income, which is a huge overlap with HN by the way, the impact could be massive.
In the end the results could be beautiful though: cannibalizing capitalism , - an inside job.
this is one of the side effects of the massive income and wealth inequality American style capitalism causes.
Doesn't matter. As the saying goes: if you owe the bank $1,000, you have a problem. If you owe the bank $100,000,000, the bank has a problem.
Debtors as a group probably would have a great deal of collective bargaining power.
The consequence of course would be that student loans would cease being made, or be made much less frequently. This would have effects, some good, some bad.
Individual mega-investors are no doubt powerful, but what about investor collectives. if a single company and/or entity can take on even 1/10th the power of Icahn collectively, it is something worth considering.
Make radical changes that impact the servicer negatively and the lender will switch to a new servicer to manage its payment flow.
The coalition of debt holders is now stuck with shares of some underperforming servicing company that just lost a huge contract.
Apps like Robinhood have opened the ability for folks earning even less than 50k , to comfortably invest.
Many tens of thousands may be interested; there could be a bigger market opportunity than you think.
Let's just look at the financial crisis from 2008, all the fraud, mismanagement, downright criminality with serious consequences for the companies involved has seen little to no shareholder activism. No executives or CEOs have been held accountable for their behavior or called to action by shareholders inspite of taking huge hits on their holdings.
The agency problem, 'short termism' and extravagant compensation and golden parachutes has also seen little action from shareholder activism.
Yet when it comes to anti-social behavior in regard to customers, employees and wider society 'shareholder interests' is rolled out on cue as some 'central plank of capitalism' when it barely works. It's become self serving and meaningless.
For the same reason that it's always been expected from any company. Do you expect a local car dealer to act in your best interests if you show up as a result of a radio ad?
Caveat Emptor is in Latin for a reason - people have been living by the maxim for a really really long time.
I'd be willing to bet that played a role in the large number of those direct to consumer pre-orders and why Tesla is valued higher than Ford.
If you gave a rapist a week in jail, would that make him stop? If not, then why are we acting as if a $2 million fine is going to stop a company from doing further violations that help it make billions of dollars?
And all the settlements, which don't even ask the company to admit to any wrongdoing, are even more blood-boiling. It's almost like it pays to be on the side of corporations when you work for the government these days.
Thinking of them less like "companies" and more like "parasites" starts to make a whole lot more sense. And it is hard to be angry with a parasite--it is in its nature.
If they're not selling the service _to you_, you're not a customer. You're at best a consumer and at worst a resource.
The level of entitlement people have when borrowing money is insane. You're not borrowing from a family member that can be manipulated into forgiving you for being a freeloader who never pays back. Every single loan and line of credit is a serious matter - stop treating it like an externality where you get money now, completely pushing the eventuality of paying it back as "something that will magically happen". You need a plan to pay back debt. If you do not have an actionable plan to pay off debt, you have no business taking it on to begin with.
Why is debt considered "normal" in the 21st century? People are living beyond their means, trying to offload the blame on lenders, while the real fault lies entirely with the borrowers. Far too many people think that loans are just fake numbers on paper or a digital screen. No, loans are real money that you need to account for. Debt is not abstract concept that can be willed away.
Probably because it's extremely hard to get a university education or a house without it?
Especially educational debt; people are required to commit to it right at the beginning of adulthood and before they've learned the skills for the career that's supposed to be able to pay it back.
So reject it already. Use cash. Spend only money you already have. Keep it simple; don't accept anything that comes with fine print. It's really not hard, you're just not used to saying "no" to it.
The world, as you function in it, is OK with how this works. Nobody is forcing you to comply.
i don't expect the $2 eggs company to care about any of the stuff that the $8 eggs company does. i just don't think that's realistic. i just assume they're fucking the chickens over, and the customer over, and themselves over, and that's going to continue as long as people buy $2 eggs -- which they will, forever, because people feel that tug at their stomach when they reach for the $8 ones. i feel it too, even with my techbrodude salary. difference is i buy it anyway, because of $many_reasons.
so i spend my money where i know the chickens aren't getting fucked over, what can i accomplish by worrying about the chickens? it's quicker to spend $8 and the world will be a better version of itself tomorrow (to me).
be the change you want to see in the world. expecting others to operate out of altruism is just not a practical thing to preach.
if i have children, i will advise them not to get college loans, and i will advise them to skip college if that means you need to. i will tell them not to do 10000 other things that are dangerous. that's what parenting is. expecting the world or companies not to try to harm you is insane and irresponsible, in my opinion.
So, pardon in advance for the vulgar language, but why the fuck is this OK? From any company?
I'm getting real damn sick and tired of "what the big print gives, the spidery print takes away" and how we're all just supposed to be OK with this, as if this is how the world works or some crap.
If your public advertising--especially, but not limited to, when administering a service on behalf of the government--explicitly says "call us and we will help you," your company should not then be able to turn around and say "well, caveat emptor for calling us, sucker." Meanwhile, the handful of agencies devoted to trying to help the individual get any kind of a fair shake from the company "provider" that massively outguns any one individual customer, are all under attack from all sides as being "too heavy handed." (I love the CFPB, in case you can't tell.)
Oh, and this whole "consumer" crap? I'm not a "consumer," I'm a customer. I'm not consuming anything from a financial services provider, I'm using their services. Stop with the idea that all of us are just mindless drones, eating our Pac Man-like dots on the way to a swift end, and maybe get back to the idea that real people are on the other end of those faceless account numbers.
(FWIW, this applies to every company with mandatory, binding arbitration clauses, including the oh-so-enlightened participants in Y Combinator. Don't restrict my ability to hold you to your side of the agreement while reserving all rights to pound me into the sand at your leisure.)