NEARLY ALL teachers think that the classes they teach are the most important ones in the curriculum. I’m no different, in that I believe that consumer protection law should be front and center in the crowded schedule of the typical undergraduate business student.
The problem is that courses on basic legal consumer protections are more likely to be taught in law schools than in undergraduate programs. Only a handful of institutions offer undergraduate programs in consumer affairs—usually within dedicated consumer science departments. These include South Dakota State University, California State University Long Beach, and Texas State University.
Bradley University in Peoria, Illinois, has afforded me the opportunity to develop an undergraduate course in consumer protection law within the Foster College of Business. Though this was a one-time offering for us, I believe such a course should be a mainstay within every business school, for the benefit of both our students and the employers who hire them.
MAKING THE CASE
Courses in consumer protection laws can benefit undergraduates in many areas of their lives:
Mental health. Though not an official American Psychological Association diagnosis, “postgraduate depression” is a term used by some mental health professionals to describe the sadness, loss of motivation, helplessness, and isolation our undergraduate students can grapple with at graduation. This depression comes because the certainty and structure they have enjoyed from kindergarten through college is disappearing. They now face constant change and an overabundance of choices.
I am not suggesting that teaching our students consumer protection law is a way to treat postgraduate depression! But such a course can help students feel more empowered and understand their rights as they pay back student loan debt or purchase homes or cars. It can help them learn how to avoid financial scams and make smarter financial decisions.
Financial health. After graduation, many of our undergraduates will be paying off student loan debt. To put this in perspective, more than 42 million Americans owe nearly 1.3 trillion USD in student loans. Our students also are at risk for racking up credit card balances, since many people incur debt to pay for nearly any major good or service.
Within my consumer protection law course, students learned about government programs available to help them manage their loan debt—from student loan forgiveness programs offered by state and federal agencies to repayment programs such as the U.S. Department of Education’s Income-Driven Repayment and Pay As You Earn.
Consumer awareness. They also learned about scammers who attempt to capitalize on those seeking relief. In 2017, the U.S. Federal Trade Commission filed a complaint against several so-called student loan debt consolidation and relief companies. These companies prey on debt holders by “falsely promising to reduce their student loan payments and interest rates or eliminate much of their debt through enrollment in student loan forgiveness programs.” In the 2017 case, consumers paid fees ranging from 499 USD to 799 USD but received no debt relief at all; many fell behind on payments or had additional interest accrue.
Recently, when my students learned of this case, they expressed disbelief—not that scammers sought to exploit college graduates, but that victims of these debt relief scammers were college educated. These students now know that only the Department of Education can determine eligibility for student loan repayment programs.
My course was divided into three sections. The first focused consumer product safety; the second, on financial products; and the third, on information privacy.
Consumer product safety. Whether involving the right to vote, equal access to education, or lending regulations, people have long fought to secure government-mandated protections. Many of my students, however, simply do not know the origins of consumer safety standards and rights.
When I last taught this course, we began by discussing The Jungle, the 1906 novel by Upton Sinclair. Focused on Chicago’s meatpacking industry at the time, the novel exposes the unimaginably harsh conditions that workers, most of whom were immigrants, endured for a meager living. Students were unaware that it was the plight of these workers that eventually led to the creation of the U.S. Food and Drug Administration.
After we discussed the book, students researched a particular product to understand how products are inspected; they learned about the role of agencies such as the U.S. Consumer Product Safety Commission. They learned how the CPSC determines that a product is dangerous, oversees product recalls, and informs the public. My students presented on products such as Barbie Dream Campers, a toy vehicle in which the pedals tended to stick; portable generators that caused carbon monoxide poisoning; hoverboards that would catch on fire; and crib bumpers that caused some children to suffocate.
Financial products. In the next section, we discussed topics such as consumer credit and debt, which I find to be extremely important with this age group. While most institutions have financial literacy programs to educate students on borrowing responsibly, budgeting, and saving, these programs often don’t spend enough time exploring subprime and predatory lending in the payday and auto loan industries, which primarily target those making low incomes.
On the one hand, critics view the payday loan industry as predatory. I told my students about one lawsuit against a payday lender filed on behalf of a housekeeper named Gloria James. She initially took out a cash advance from National Financial LLC for 200 USD to pay for rent and food. However, under the terms of the loan, she ended up paying 1,820 USD—an effective annual interest rate of 838.45 percent. The court ruled in her favor, finding the contract to be unconscionable and awarding her 3,247 USD in damages. Unfortunately, thousands of others are not so lucky.
On the other hand, industry advocates argue that payday loan lenders fill a need, by providing funds to low-income consumers to pay for emergency expenses, such as car repairs, medical bills, or even groceries—funds they could not access using traditional financial products. At the same time, lobbyists fight regulations that would cap payday loan interest rates or curtail the ability for consumers to roll over previous loans to new ones.
As a class project, my students explored a claim made by John Oliver, host of HBO’s program “Last Week Tonight,” that there are more payday loan stores in the U.S. than McDonald’s and Starbucks locations combined. One group of students searched the number of payday loan stores in Peoria, while others searched the number of McDonald’s and Starbucks stores. They found 21 payday loan storefronts (including one just one mile from Bradley’s campus), compared to just four McDonald’s restaurants and three Starbucks storefronts—a ratio of 3:1. Through this exercise, students better grasped the prevalence of the industry.
THE MOCK HEARING TURNED INTO AN ENLIGHTENING DISCUSSION AND SERVED AS A REMINDER THAT THERE ARE ALWAYS AT LEAST TWO SIDES TO AN ISSUE.
Finally, I arranged a role-playing exercise, in which my students took part in a mock hearing before a committee of the Illinois State General Assembly. One group of students represented an anti-payday-loan coalition that wanted to eliminate or limit the payday industry in the state. Another group represented a payday loan industry lobbying group fighting these changes. After each side presented its argument, one student playing the state lawmaker voted on the bills. The mock hearing turned into an enlightening discussion on both sides of the issue and served as a reminder that there are always at least two sides to an issue.
Information privacy. The last section of the course delved into the privacy implications of technology. This topic is especially important to our students’ future. Approximately 45 percent of 10- to 12-year-old children in the U.S. use cell phones, and an estimated 2.77 billion people around the world have social media accounts. With technology use so ubiquitous, corporations are cashing in the collection and use of consumer data—which puts students’ private data at risk.
I offered students the example of a teenager who, in 2011, purchased a pregnancy test at the retail store Target. Based on her purchase, Target mailed pregnancy-related coupons to her address, where her father was the first to collect the mail. Needless to say, he was not pleased that Target seemed to know his daughter was pregnant before he did!
We also discussed how different governments approach protecting their citizens’ data. Europe and China have implemented data privacy protection and cybersecurity measures within the last few years, but the United States government has yet to pass any comprehensive measure. We explored the failed concept in the United States of “mandated disclosure,” which holds that if companies disclose to consumers what data they collect and how they use it, consumers can protect themselves by opting out of that use. But most often, such mandated disclosures are unnecessarily complex, making it difficult for consumers to make informed decisions.
I WANTED MY STUDENTS TO KNOW THAT THEY CANNOT DEPEND ON CREDIT AND IDENTITY MONITORING SERVICES TO ENSURE THE SAFETY AND ACCURACY OF THEIR PERSONAL INFORMATION.
Finally, we looked at high-profile data breaches, such as the one that occurred at credit reporting agency Equifax in 2017. After the private information of 147 million Americans was exposed, Equifax paid a settlement of 650 million USD and offered ten years of free credit monitoring to all victims.
In this part of the course, I wanted my students to know that they cannot depend on credit and identity monitoring services to ensure the safety and accuracy of their personal information. For example, we talk about LifeLock’s founder and former CEO, Todd Davis, who in 2006 published his Social Security Number on box trucks in New York City and online, claiming that “LifeLock makes your personal information useless to criminals.” Students were amused to learn that, as a result of this ill-advised stunt, his identity was stolen 13 times, used to obtain loans and a cell phone account.
THE WAY FORWARD
To fulfill their missions, universities must do as much as possible to prepare undergraduate students for the realities they face after graduation. This includes ensuring they are versed in the rights they have as data-generating consumers and the steps they can take to protect themselves and the people around them.
A course in consumer protection law might not seem like it fits within the business curriculum. But I believe it’s a crucial part of turning our students into savvy and secure future leaders.
Tyler J. Smith is an assistant professor of entrepreneurship, technology and law at Bradley University’s Foster College of Business in Peoria, Illinois.