Will Increased Disclosure Help? Evaluating the Recommendations of the ALI\u27s Principles of the Law of Software Contracts

The aim of the American Law Institute\u27s new Principles of the Law of Software Contracts is to improve online contracting practices. Instead of regulating terms directly to reduce the possibility of unfair or biased terms, the Principles emphasize increased contract disclosure to encourage readership and comparison shopping. In this Article, I test whether increasing disclosure in the proposed manner is likely to increase readership in the setting of end user license agreements (EULAs) of software sold online. I follow the clickstreams of 47,399 households to 81 Internet software retailers and find that EULAs are approximately 0.36 percent more likely to be viewed when they are presented as clickwraps that explicitly require assent, as suggested by the Principles, than when they are presented as browsewraps. The results indicate that mandating disclosure will not by itself change readership or contracting practices to a meaningful degree. I briefly review other approaches to reform that may be more effective but come with their own limitations

Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime Mortgages

African-Americans and Latinos get high-priced subprime mortgages far more frequently than whites -- even when they are equally qualified, according to a groundbreaking new study from CRL.Lenders say they charge more because African-Americans and Latinos on average have shakier credit histories, which makes lending to them riskier. But that explanation is simply wrong.In the most extensive study of its kind, CRL found that African-Americans and Latinos are commonly almost a third more likely to get a high-priced loan than white borrowers with the same credit scores. The study examined 50,000 subprime loans. A House subcommittee is now discussing whether to pass a weak bill favored by industry or strong protections that would stop predatory lending practices like this in the vast sub-prime mortgage market, where people with blemished credit borrow and most mortgage abuses occur

Rescission Under the Truth in Lending Act: Borrowers Should be Required to File Suit Within Three Years

During the Financial Crisis of 2008 and the Great Recession that followed, homeowner defaults and foreclosures increased dramatically. These homeowners facing foreclosure had few options to obtain relief and little leverage to negotiate with their lenders. One of the few places they could turn was to the Truth in Lending Act (TILA), which provides that consumers can rescind certain home loans for up to three years after loan closing if the lender failed to make certain material disclosures to the consumer prior to closing. In the wake of the Financial Crisis, a circuit split emerged regarding this three-year temporal limitation. Some courts held that, in order to rescind, the consumer must file suit within three years of the consummation of the transaction(the File Suit Approach), while others held that the consumer must only provide notice to the lender of its intention of rescind within such period (the Notice Only Approach). This issue may seem like a mundane technicality, but failing to exercise one\u27s right to rescind in a timely manner could foreclose the consumer\u27s only avenue for relief. This Note argues that the correct, and more practical, interpretation of the statute is the File Suit Approach