Product liability as model for consumer finance regulation?

Let’s hope it doesn’t unfold that way, says Richard Epstein [Truth on the Market]

P.S. It looks as if from Congress will accord lawyers and some other professionals an exemption from Federal Trade Commission regulations on identity theft that would have lumped them in with more traditional lenders because they often do not bill clients at the time work is performed. Fair enough, one supposes, but also another indication of the truism that one’s success in dodging nonsensical regulation is often a function of one’s status as a potent lobby in Washington.


  • i am counsel for a home care agency, and as far as the red flags rule was concerned, the FTC was waaay off the reservation.

    I suggest you read the excellent coverage of that issue at the blog of legal times. Literally the FTC’s reading was so broad that they said anyone who had a delay between doing the work and getting paid was “extending credit.” which covers… just about everyone. As the D.C. District Judge said, knocking this interpretation down, a simple plumber who works for two days on a job and asks for his payment when the work is done, would have been considered a creditor under these laws and thus required to do things like create a plan to deal with identity theft.

    And further, and this is obvious when you read judge walton’s opinion, this was in conflict with previous caselaw interpreting the Equal Credit Opportunity Act. FACTA literally took the exact same definiton of creditor as under this previous civil rights law. i don’t mean they just made the language identical. They literally defined terms like “credit” and “creditor” solely by reference to those prior laws. And there were a string of cases under ECOA that narrowed the interpretation of those terms, like credit and creditor, to what you normally think of when you think of those terms. But the FTC tried to reject those previous interpretations and come up with a new, ridiculously broad, interpretation.

    My point is, it is incorrect to say this is a victory for favored lobbyists. The FTC was out of control, going way off the reservation, and Congress was simply reasserting a little sanity into this.

    I have made this joke before, but i will make it again, but with some seriousness. You guys should consider a side blog, called “overregulated.” Especially in the last two years it is breathtaking how the regulatory state thinks it can do whatever the hell it wants.

  • I’m not sure there’s actually a significant difference between what we’re saying. I called the FTC regulation “nonsensical,” which we agree on. I assume we also agree that in some other areas of nonsensical and highly burdensome regulation — CPSIA comes to mind — targets with no major or potent lobbying presence in the capital have appealed in vain for Congress to save them from the crazy results.