Lead Articles

A Yawning Black Abyss:* Section 35 and the Equal Protection of Women in the Commonwealth of Massachusetts

PdfPDF by Gregory D. Chisholm · December-26-2013 · Categories: Current, Lead Articles, Lead Articles, Number 4, Print Edition, Volume 46

In Massachusetts, an individual with a drug or alcohol problem may be confined against his or her will in a publicly funded detoxification facility. Such a confinement is known as a civil commitment, and may occur (pursuant to chapter 123, section 35 of the Massachusetts General Laws (Section 35)) upon the petition of certain relatives of the individual or other official personnel, and after both an examination by a psychologist and a hearing before a district court judge. A civil commitment may last up to ninety days. When no beds are available at a publicly funded detoxification facility, an individual may nonetheless be detained in one of two facilities: Bridgewater State Hospital (BSH), if male; or the Massachusetts Correctional Institution [...]

Analyzing the Tension Between Military Force Reductions and the Constitution: Protecting an Officer’s Property Interest in Continued Employment

PdfPDF by Joshua Flynn-Brown · December-26-2013 · Categories: Current, Lead Articles, Lead Articles, Number 4, Print Edition, Volume 46

In 2011, the unemployment rate for military veterans discharged between the years 2001 and 2011 stood at 12.1%. The jobless rate for all veterans stood at 8.3%. Meanwhile, the overall unemployment rate hovered at 8.8%. Between the U.S. government’s current budgetary tailspin and the ongoing drawdown with respect to the wars in Iraq and Afghanistan, it is inevitable that service members will feel the impact of economic challenges. Nevertheless, this impact becomes even more dramatic when analyzing the Department of Defense’s (DOD) force-shaping measures in 2011 because these force reductions are responsible for discharging tens of thousands of service members.   Such deep military cuts present a unique opportunity to legally dissect the military’s employment culture. Can the military fire [...]

Credit Reports and Employment: Findings from the 2012 National Survey on Credit Card Debt of Low- and Middle-Income Households

PdfPDF by Amy Traub · December-19-2013 · Categories: Current, Lead Articles, Lead Articles, Number 3, Print Edition, Volume 46

Today, it is common for employers to look at job applicants’ credit history before making hiring decisions. Even a cursory look at a popular job listing website reveals that employers require credit checks for jobs as diverse as doing maintenance work, offering telephone technical support, assisting in an office, working as a delivery driver, selling insurance, laboring as a home-care aide, supervising a stockroom, and scooping frozen yogurt. The Society for Human Resources Management (SHRM) surveyed its members in 2010 and concluded that 60% of them check an employee’s credit history when hiring for some or all positions. Yet despite the prevalence of employment credit checks, researchers, policymakers, and employers understand little about what credit checks reveal to employers, their [...]

Medical Debt and Its Relevance When Assessing Creditworthiness

PdfPDF by Mark Rukavina · December-19-2013 · Categories: Current, Lead Articles, Lead Articles, Number 3, Print Edition, Volume 46

Empirical data, qualitative analysis, and case studies document the prevalence of medical debt in America. However, the influence of medical debt on credit reports and scores has not been thoroughly examined. We do know that medical payment data are not uniformly reported to consumer reporting agencies. Unlike other credit-report information, the type of entity furnishing the data often determines whether medical-bill data are used in a credit score. We also know that medical-billing errors are commonplace and that medical collections frequently involve disputes with insurance companies over liability for the accounts. Such distinctive problems⎯together with the unique conditions under which medical debt is incurred⎯raise concerns about the predictive value of medical payment data in assessing credit risk.

Discriminatory Effects of Credit Scoring on Communities of Color

PdfPDF by Lisa Rice and Deidre Swesnik · December-19-2013 · Categories: Current, Lead Articles, Lead Articles, Number 3, Print Edition, Volume 46

Our current credit-scoring systems have a disparate impact on people and communities of color. These systems are rooted in our long history of housing discrimination and the dual credit market that resulted from it. Moreover, many credit-scoring mechanisms include factors that do not just assess the risk characteristics of the borrower; they also reflect the riskiness of the environment in which a consumer is utilizing credit, as well as the riskiness of the types of products a consumer uses. . .

The Misconception of the Consumer as a Homo Economicus: A Behavioral-Economic Approach to Consumer Protection in the Credit-Reporting System

PdfPDF by Adi Osovsky · December-19-2013 · Categories: Current, Lead Articles, Lead Articles, Number 3, Print Edition, Volume 46

The significant increase in the number of consumer transactions, along with the expansion of information technology, has created massive amounts of detailed information on an individual’s credit history. Consumer credit reporting agencies (CRAs) play an important role in this financial information market. Although the credit-reporting system has significant economic benefits, CRAs have a tarnished reputation as far as consumer protection is concerned. While making their business out of gathering, compiling, and analyzing consumers’ information, CRAs generally do not have privity of contract with those very same consumers. Thus, the CRAs have little or no incentive to protect consumers’ privacy and ensure the accuracy of every single credit report. Such lack of incentive has resulted in numerous consumer problems, including inaccuracies [...]

Selling Consumers Not Lists: The New World of Digital Decision-Making and the Role of the Fair Credit Reporting Act

PdfPDF by Ed Mierzwinski and Jeff Chester · December-19-2013 · Categories: Current, Lead Articles, Lead Articles, Number 3, Print Edition, Volume 46

This Article explores the new world of financial decision-making, which draws on a range of Internet techniques. While some practices are regulated as traditional credit reports under the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681–1681x, credit bureaus and other financial firms are expanding into currently unregulated areas, including online marketing and sales. Does the FCRA need to be updated to address the growing use of real-time database scoring and decision-making on the Internet? Where is the line drawn between when an online, real-time decision-making score is used simply to serve as advertising for a financial product or to make a decision about establishing a consumer’s eligibility for credit? When companies use a consumer’s online profile for establishing his [...]

Adapting Credit Scores to Evolving Consumer Behavior and Data

PdfPDF by Frederic Huynh · December-19-2013 · Categories: Current, Lead Articles, Lead Articles, Number 3, Print Edition, Volume 46

Credit scores have become an integral component of the credit landscape. As that landscape shifts, credit-score algorithms should adapt to changes in consumer behavior that are reflected in the information that creditors share with credit-reporting agencies. In addition to adjusting the algorithm’s mix of characteristics and associated score weights over time, model developers should also evolve the predictive characteristics⎯those building blocks of the score algorithm⎯in order to account both for changes in the ways consumers seek and use credit, and for the introduction of new financial products. Through such advances, scientists can develop increasingly predictive scores based on credit information, and they can develop more sophisticated logic that recognizes consumers who manage credit responsibly. This Article discusses three different research [...]

The Legal Framework of Consumer Credit Bureaus and Credit Scoring in the European Union: Pitfalls and Challenges—Overindebtedness, Responsible Lending, Market Integration, and Fundamental Rights

PdfPDF by Federico Ferretti · December-19-2013 · Categories: Current, Lead Articles, Lead Articles, Number 3, Volume 46

The integration of European Union (EU) credit markets is crucial for the efficient functioning of the EU financial system, for the EU economy as a whole, and for the full achievement of the four freedoms guaranteed by the EU’s internal market.1 Neither the consumer nor the mortgage-credit markets are an exception to this need for integration, and EU policymakers are paying increased attention to them. Concurrently, the market for loans available to consumers—both consumer loans and mortgage-credit loans—has grown rapidly in the last decade across the EU and is becoming increasingly sophisticated. However, the development of retail and mortgage-credit markets has increasingly left European consumers in debt. This growth of consumer indebtedness is becoming a concern for national and EU [...]

Foreword: Symposium On Credit Scoring and Credit Reporting

PdfPDF by Terry Clemans · December-19-2013 · Categories: Current, Lead Articles, Lead Articles, Number 3, Print Edition, Volume 46

A lack of credit or the inability to build a credit history has the ability to destroy an individual’s chance at upward financial mobility. Today, a person without good credit gets penalized in almost every aspect of his or her financial existence. The penalties include higher interest rates because these individuals represent an increased risk when borrowing, as well as increased insurance rates, less access to rental housing, and the potential of lost employment opportunities. Worse yet, some will be punished by the inability to even obtain insurance or put a roof over their heads. Without a good credit history, the opportunity to improve one’s personal financial standing becomes daunting at best, and sadly, impossible for all too many income-challenged [...]