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90 Tul. L. Rev. 373 (2015-2016)

handle is hein.journals/tulr90 and id is 403 raw text is: A Human Rights Approach to Consumer Credit Chrystin Ondersma* As consumer credit and its attendant problems have exploded around the globe, consumer protection has been the dominan if not exclusive, famework for mitigating risks to the consumer Historically, consumer protection efforts in the consumer credit context have focused on leveling the playing field between debtors and creditors by preventing friaud and ensuring proper disclosure. Certain types of loans arm now subject to substantive restuctions, such as the new Dodd-Frank regulations requiring mortgage lenders to ensure that borrowers have the ability to repay high-cost mortgages. Despite these important advances, some critical gaps remain Prdatory lending continues to be a significant problem In addiin, even in cireumstances where there are effective disclosures and where predatory behavior is absent, consumers can find themselves f mancially distressed as a result of onerous debt obligations. In particula the current approach does not effectively address situations in which a debtors desperation renders her wil1ing to accept credit on whatever terms itis offered Tis Article suggests that a human rights fiamework can provide a complementay overlay to the consumer protection approach to consumer credit. Far from supplanting the consumer protection framework, human rights principles can bolster and complement consumer protection efforts Human rights principles can establish a universal floor of protection that prevents a 'ace to the bottom and that cannot be circumvented on economic efficiency grounds. Ipropose a specific example of a consumer credit regulation based on human rights states should not enforce a consumer credit contact if, at the tnie of the contract, there was a substantial likelihood that the contract would render the debtor unable to meet her basic needs. I. INTRODUCTION ............................................................................. 375 II. CONSUMER CREDIT PROBLEMS ................................................... 378 A. Income Shortfalls and Consumer Desperation ................. 379 B. Onerous Crekt Terms ........................................................ 382 III. THE CONSUMER PROTECTION APPROACH TO REGULATION OF CONSUMER CREDIT ................................................................ 387 A. Consumer Credit Regulation Histotically ........................ 388 B. Expansion ofSubstanve Regulation ................................ 392 C Persistence ofMarket Concerns ........................................ 396 D Weaknesses in CurrentApproach ...................................... 400 1. Problems with Leveling the Playing Field. ........... 400 * © 2015 Chrystin Ondersma. Associate Professor of Law, Rutgers School of Law- Newark. Many thanks to Jean Braucher, Susan Block-Lieb, Matthew Bruckner, Gina Conn, Jorge Contesse-Singh, Sarah Dadush, Andrew Dawson, Pamela Foohey, Nizan Geslevich Packin, Yuliya Guseva, Melissa Jacoby, Ted Janger, Jason Kilborn, John Pottow, Beth Stephens, Ray Warner, participants in the Rutgers School of Law faculty colloquium, and participants in the Young Bankruptcy Scholars' Work-in-Progress Workshop.

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