When nudges fail: Slippery defaults

University of Chicago Law Review

Volumn 80, Issue 3, 2013, Pages 1155-1229

  Willis, Lauren E ^a,b  

^a HARVARD LAW SCHOOL   (United States)

^b LOYOLA LAW SCHOOL   (United States)

Author keywords

[No Author keywords available]

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EID: 84886495595     PISSN: 00419494     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (238)

1. See Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness 6 (Yale 2008).
2. "Policy defaults" are defaults put in place by regulators with the explicit goal of increasing the number of people in the default position. See Craig R.M. McKenzie, Michael J. Liersch, and Stacey R. Finkelstein, Recommendations Implicit in Policy Defaults, 17 Psych Sci 414, 414 (2006).
3. See, for example, Omri Ben-Shahar and John A.E. Pottow, On the Stickiness of Default Rules, 33 Fla St U L Rev 651, 670-81 (2006) (providing examples of situations in which default rules are sticky, including revocability of offers and the duration of employment contracts);
4. Russell Korobkin, Inertia and Preference in Contract Negotiation: The Psychological Power of Default Rules and Form Terms, 51 Vand L Rev 1583, 1587-88 (1998) (explaining that, even in the absence of high transaction costs, the "initial allocation of legal entitlements can affect preferences for those entitlements"). By "sticky," I mean that more people stay in that position than would were it not the default. A "slippery" default is a default that is not sticky, or is less sticky than it was intended to be.
5. When another party has interests contrary to the default, policy defaults might also be characterized as "penalty defaults" from the point of view of that other party. However, the term "penalty defaults" refers to default rules that one or more parties dislike, placed in the law with the aim that the parties would contract around the default. Penalty defaults aim not to be sticky, but to force information revelation and negotiation. See Ian Ayres, Regulating Opt-Out: An Economic Theory of Altering Rules, 121 Yale L J 2032, 2087 (2012).
6. Some proponents emphasize that nudges help people choose what is best for themselves, whereas others emphasize that nudges should encourage people to choose what is best for society (for example, increased organ donation rates). See, for example, Russell Korobkin, Libertarian Welfarism, 97 Cal L Rev 1651, 1653 (2009). This article largely assumes - as policymakers appear to do - that individual and social welfare are in harmony.
7. Ian Ayres, Menus Matter, 73 U Chi L Rev 3, 4-5 (2006).
8. Ayres has elsewhere recognized that default rules vary in stickiness. See, for example, Ayres, 121 Yale L J at 2084-92 (cited in note 4).
9. Cass R. Sunstein and Richard H. Thaler, Libertarian Paternalism Is Not an Oxymoron, 70 U Chi L Rev 1159, 1160-61 (2003).
10. See Thaler and Sunstein, Nudge at 10 (cited in note 1).
11. *6 (Dec 2007), online at https://institutional.vanguard. com/iam/pdf/CRRAUTO.pdf?cbdForceDomain=true (visited Sept 11, 2013).
12. See, for example, John Beshears, et al, Public Policy and Saving for Retirement: The Autosave Features of the Pension Protection Act of 2006, in John J. Siegfried, ed, Better Living through Economics 274, 287 (Harvard 2010) (noting "clear and compelling evidence that automatic enrollment was an effective means of increasing savings and improving economic well-being, particularly of minorities and of the poor");
13. *4, 7 (Federal Reserve Bank of Boston 2009), online at http://www.urban.org/uploadedpdf/1001374-asset- building.pdf (visited Sept 11, 2013) (listing automatic enrollment in retirement-savings vehicles as one of the policies that would "help low-income families the most"). This interpretation may be erroneous, as there are some low-income employees who participate because of automatic enrollment but for whom participation is not optimal. The details of this argument are beyond the scope of this Article.
14. The goal is not merely to inform people about alternatives - a goal which might be met through penalty defaults, see note 4, or forcing people to make a choice between presented alternatives (called "mandated choice"), see Thaler and Sunstein, Nudge at 86 (cited in note 1).
15. *4 (New America Foundation Oct 2008), online at http://www.newamerica.net/files/naf-behavioral-v5.pdf (visited Sept 11, 2013);
16. Russell Korobkin, The Status Quo Bias and Contract Default Rules, 83 Cornell L Rev 608, 610 (1998). I substantiate the claim empirically and flesh out boundary conditions on policy defaults here.
17. See Ayres, 121 Yale L J at 2036 (cited in note 4);
18. Brett H. McDonnell, Sticky Defaults and Altering Rules in Corporate Law, 60 SMU L Rev 383, 384-85 (2007).
19. See Elizabeth F. Emens, Changing Name Changing: Framing Rules and the Future of Marital Names, 74 U Chi L Rev 761, 840 (2007).
20. *27 (NBER Working Paper, Sept 2011), online at http://www.nber.org/programs/ag/rrc/NB11-01%20Brown,%20Farrell, %20Weisbenner%20FINAL.pdf (visited Sept 11, 2013) (finding significant heterogeneity in the reasons people cited for sticking with a retirement-plan default).
21. See, for example, William Samuelson and Richard Zeckhauser, Status Quo Bias in Decision Making, 1 J Risk & Uncertainty 7, 8 (1988) (describing a series of decision-making experiments finding status-quo bias in the face of multiple choices).
22. See, for example, Peter Boxall, W.L. (Vic) Adamowicz, and Amanda Moon, Complexity in Choice Experiments: Choice of the Status Quo Alternative and Implications for Welfare Measurement, 53 Austl J Ag & Res Econ 503, 513 (2009) (reporting data showing that increasing complexity of choice increases the probability that individuals choose the status quo).
23. See, for example, Ravi Dhar, Consumer Preference for a No-Choice Option, 24 J Consumer Rsrch 215, 229 (1997) (reporting studies that show consumers may experience an "inability to choose among alternatives that are relatively close in overall attractiveness").
24. See, for example, Korobkin, 51 Vand L Rev at 1622-24 (cited in note 3) (presenting evidence that when preference uncertainty is removed, defaults lose their power);
25. Sarah Lichtenstein and Paul Slovic, The Construction of Preference: An Overview, in Sarah Lichtenstein and Paul Slovic, eds, The Construction of Preference 1 (Cambridge 2006) (observing that judgment and decision biases are strongest when preferences are uncertain);
26. Samuelson and Zeckhauser, 1 J Risk & Uncertainty at 8 (cited in note 26) (finding subjects more likely to choose to remain with the status quo when their preferences are weaker).
27. *17 (finding that lack of background knowledge about investing increases reliance on a retirement-plan default).
28. See, for example, Scott Eidelman and Christian S. Crandall, A Psychological Advantage for the Status Quo, in John T. Jost, Aaron C. Kay, and Hulda Thorisdottir, eds, Social and Psychological Bases of Ideology and System Justification 85, 99 (Oxford 2009).
29. See Thaler and Sunstein, Nudge at 6 (cited in note 1) ("A nudge ⋯ alters people's behavior in a predicable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid.").
30. *20 (cited in note 25) (reporting study results showing that 13.4 percent of participants remained in the default retirement plan because they did not expect to work at the company for long enough to vest in the plan).
31. *20 (Carnegie Mellon University CyLab Oct 31, 2011), online at http://www.cylab.cmu. edu/files/pdfs/tech-reports/CMUCyLab11017.pdf (visited Sept 11, 2013).
32. *33 figure 1 (cited in note 25) (reporting that 19 percent of employees who stuck with a retirement plan default stated that they did so because they did not know they could opt out).
33. See Jessamyn C. West, Without a Net: Librarians Bridging the Digital Divide 21 (Libraries Unlimited 2011).
34. See Korobkin, 51 Vand L Rev at 1605-09 (cited in note 3) (noting that, although a default rule can be the position favored by inertia, inertia can also favor any position an actor finds herself in).
35. See Samuelson and Zeckhauser, 1 J Risk & Uncertainty at 33-42 (cited in note 26).
36. In addition to the judgment biases listed here, the process of anchoring and adjustment can create what has been dubbed the "default pull." Where choices include a range of possible values, this process can lead people to select not the default, but a choice closer to the default than they would otherwise choose. See Nikhil Dhingra, et al, The Default Pull: An Experimental Demonstration of Subtle Default Effects on Preferences, 7 Judgment & Dec Making 69, 75 (2012) (reporting evidence that defaults pull decision maker choices closer to the default position than these choices would otherwise be, even though the decision maker does not choose the default option itself). Because the default choices examined in this Article are all binary - one is either in the default position or not in the default position - anchoring and adjustment are not relevant here.
37. See Nathan Novemsky and Daniel Kahneman, The Boundaries of Loss Aversion, 42 J Mktg Rsrch 119, 123-24 (2005).
38. See, for example, Isaac Dinner, et al, Partitioning Default Effects: Why People Choose Not to Choose, 17 J Exp Psych: Applied 332, 333 (2011) (explaining and providing evidence for this "Query Theory" for loss aversion);
39. *39 (unpublished conference paper, Exploring New Frontiers in Financial Capacity for Vulnerable Populations Workshop, UW-Madison Center for Financial Security, June 5-6, 2012), online at http://financialcapability.files.wordpress.com/2012/03/eric-johnson.pdf (visited Sept 11, 2013) (finding that query order strongly encouraged subjects to prefer the first alternative considered).
40. See Richard Thaler, Toward a Positive Theory of Consumer Choice, 1 J Econ Beh & Org 39, 44 (1980) (coining the term "endowment effect" and reporting experimental evidence of its existence). The exposure effect has a similar result through a different path. When people are exposed to something and are not harmed in the process, they prefer it over something to which they have not been exposed.
41. See, for example, Robert B. Zajonc, Attitudinal Effects of Mere Exposure, 9 J Personality & Soc Psych Monograph Supp 1, 13 (1968).
42. See Russell Korobkin, Wrestling with the Endowment Effect, or How to Do Law and Economics without the Coase Theorem, in Eyal Zamir and Doron Teichman, eds, Oxford Handbook of Behavioral Economics and the Law (Oxford forthcoming).
43. See Yaacov Trope and Nira Liberman, Construal-Level Theory of Psychological Distance, 117 Psych Rev 440, 451-53 (2010) (explaining the tendency for people to discount over psychological distance, including over time and over uncertainty).
44. See Ted O'Donoghue and Matthew Rabin, Choice and Procrastination, 116 Q J Econ 121, 122 (2001) (explaining why high stakes can lead to procrastination).
45. *33 figure 1 (cited in note 25) (reporting that 37.9 percent of employees who stuck with a retirement-plan default stated that they did so because they never got around to making a choice).
46. See Sheena Sethi-Iyengar, Gur Huberman, and Wei Jiang, How Much Choice Is Too Much? Contributions to 401(k) Retirement Plans, in Olivia S. Mitchell and Stephen P. Utkus, eds, Pension Design and Structure: New Lessons from Behavioral Finance 83, 88-91 (Oxford 2004).
47. See, for example, Samuelson and Zeckhauser, 1 J Risk & Uncertainty at 31-33 (cited in note 26).
48. See Carmen M. Radecki and James Jaccard, Psychological Aspects of Organ Donation: A Critical Review and Synthesis of Individual and Next-of-Kin Donation Decisions, 16 Health Psych 183, 186-87 (1997).
49. See Jonathan Baron and Ilana Ritov, Reference Points and Omission Bias, 59 Org Beh & Hum Dec Processes 475, 478 (1994).
50. See David A. Asch, et al, Omission Bias and Pertussis Vaccination, 14 Med Dec Making 118, 120-21 (1994).
51. See McKenzie, Liersch, and Finkelstein, 17 Psych Sci at 416-17 (cited in note 2) (finding that people believe defaults reflect what the person who set the default thinks is best for them).
52. *33 figure 1 (cited in note 25) (reporting that 20 percent of employees who stuck with their employer's retirement-plan default stated that one reason they did so was they believed their employer had endorsed the default).
53. See McKenzie, Liersch, and Finkelstein, 17 Psych Sci at 416-17 (cited in note 2) (finding that people believe defaults reflect what the person who set the default believes most people want).
54. See Thaler and Sunstein, 93 Am Econ Rev at 177 (cited in note 7).
55. Faith in the wisdom of others has been dubbed "social proof." Robert B. Cialdini, Influence: Science and Practice 100 (Allyn and Bacon 4th ed 2001).
56. See William G. Gale, et al, Increasing Annuitization in 401(k) Plans with Automatic Trial Income, Retirement Security Project Report No 2008-2 10-11 (Retirement Security Project 2008), online at http://www.brookings.edu/~/media/ Files/rc/papers/2008/06-annuities-gale/06-annuities-gale.pdf (visited Sept 11, 2013) (suggesting that biases that discourage retirees from annuitizing their savings upon retirement could be counteracted by defaulting them into annuitization, with an option to opt out, and explaining that by trying annuitization for two years, retirees would discover through experience whether they like it).
57. See, for example, Frequently Asked Questions (Opera Software 2013), online at http://www.opera.com/company/investors/faq/#faq3 (visited Sept 11, 2013) (explaining that one of the ways the Opera browser generates revenue is through fees paid by companies for integrated search and shopping bars).
58. Jeff Bercovici, NY Times Editor on the 'Beauty' of Readers' Ignorance (Forbes Nov 10, 2010), online at http://www.forbes.com/sites/jeffbercovici/2010/ 11/10/ny-times-editor-on-the-beauty-of-readers-ignorance (visited Sept 11, 2013).
59. See Jeff Sovern, Opting In, Opting Out, or No Options at All: The Fight for Control of Personal Information, 74 Wash L Rev 1033, 1092 & n 284 (1999) (describing the results of a Federal Communications Commission study).
60. See Steve Lohr, The Default Choice, So Hard to Resist, NY Times BU5 (Oct 16, 2011).
61. See, for example, Sovern, 74 Wash L Rev at 1085-87 (cited in note 62) (detailing ways in which firms use invisibility, costs, and confusion to deter consumers from opting out of defaults that allow firms to collect and use personal consumer information).
62. See, for example, Kara Rowland, Customers Say XM Didn't Let Them Go without a Fight, Wash Times A1 (June 20, 2007), online at http://www. washingtontimes.com/news/2007/jun/20/customers-say-xm-didnt-let-them-go-without- a-fight/?page=all (visited Sept 11, 2013) ("It took more than two weeks, five phone calls, numerous e-mails ⋯ and ultimately a formal complaint to our state attorney general to have our subscriptions canceled as requested.").
63. See, for example, Ben Popken, RyanAir Hides Travel Insurance Opt-Out under "Country of Residence" Drop-Down (Consumerist Sept 17, 2010), online at http://consumerist.com/2010/09/ryanair-hides-travel-insurance-opt-out- under-country-of-residence-drop-down.html (visited Sept 11, 2013) (demonstrating how an airline's website leads consumers to unwittingly accept the firm's default travel insurance when they buy a plane ticket because the opt-out choice is hidden behind a drop-down menu);
64. Debbie Timmins, How to Turn Off Xbox Live Auto-Renewal Online! (Average Gamer Oct 21, 2010), online at http://www.theaveragegamer.com/2010/10/21/how-to- turn-off-xbox-live-auto-renewal-online (visited Sept 11, 2013) (explaining how Microsoft has hidden the link that must be clicked to stop Xbox Live from automatically renewing).
65. See, for example, Nick Wingfield, Microsoft Quashed Effort to Boost Online Privacy, Wall St J (Aug 1, 2010), online at http://online.wsj.com/ article/SB10001424052748703467304575383530439838568.html (visited Sept 11, 2013) (describing how Microsoft's Internet Explorer 8.0 browser defaults to a setting by which advertisers can track users' online browsing, and although users can opt out of the default, they must do so every time they start up the software);
66. Ben Popken, Call Every Time to Make Sure Extra Payments Go to Paying Down Principal (Consumerist May 3, 2011), online at http://consumerist.com/2011/05/ 03/call-every-time-to-make-sure-extra-payments-go-to-paying-down-principal (visited Sept 11, 2013) (reporting one bank that, by default, applies any payment on a mortgage beyond the amount due to future interest rather than the principal and requires borrowers who want to pay down the principal to call in every month to request a change in the way the payment is applied).
67. See, for example, IBM Software Subscription and Support (IBM), online at http://www-01.ibm.com/software/lotus/passportadvantage/softwaremaintenance.html (visited Sept 11, 2013) (describing the benefits of automatically renewing subscription to IBM software support, which is the default).
68. See Nick Bilton, Price of Facebook Privacy? Start Clicking, NY Times B8 (May 13, 2010).
69. For example, computer software programs often come with "recommended" default installation settings. See, for example, Wifi Network (2009), online at http://support.wmwifirouter.com/documentation/57/Wifi- network (visited Sept 11, 2013) ("The default and advised setting for this is 1, and you should not change it unless you know what you are doing.").
70. See Dave Taylor, Recommended Facebook Privacy Settings: Everyone? (The Business Blog at Intuitive.com June 2, 2010), online at http://www.intuitive. com/blog/recommended-facebook-privacy-settings-everyone.html (visited Sept 11, 2013);
71. Kevin Bankston, Facebook's New Privacy Changes: The Good, the Bad, and the Ugly, Deeplinks Blog (Electronic Frontier Foundation Dec 9, 2009), online at https://www.eff.org/deeplinks/2009/12/facebooks-new-privacy-changes-good-bad- and-ugly (visited Sept 11, 2013).
72. See Julie R. Agnew, et al, Who Chooses Annuities? An Experimental Investigation of the Role of Gender, Framing and Defaults, 98 Am Econ Rev 418, 421 (2008).
73. *1 (Chase 2011), online at https://chaseonline.chase.com/resources/Chase-Opt-In-Branch- Flyer-v6.pdf (visited Sept 11, 2013) ("[W]e typically do not pay overdrafts if your account is not in good standing, or you are not making regular deposits.");
74. Helpful Tips on Managing Your Account (M&T Bank 2013), online at https://www.mtb.com/personal/loanscredit/OverdraftProtection/ManageMyAccount/ Pages/Managing-Your-Account.aspx (visited Sept 11, 2013) (reserving the right to deny transactions that would overdraft an account);
75. Frequently Asked Questions (TD Bank 2013), online at http://www.tdbank. com/popup/TDAFAQ.html (visited Sept 11, 2013) ("TD Bank FAQ") (same). See also 12 CFR § 205.17(b)(3) Supp I (noting that banks retain discretion to deny transactions that overdraw an account even if the consumer has opted out of the policy default);
76. Ron Lieber and Andrew Martin, Overspending on Debit Cards Is Painful, but Not for Banks, NY Times A20 (Sept 9, 2009).
77. *3 (Consumer Federation of America June 29, 2012), online at http://www.consumerfed.org/pdfs/Comments.CFPB. Overdraft.CRL.CFA%20.NCLC6.29.12.pdf (visited Sept 11, 2013) (reporting various bank overdraft practices and listing recommendations for improvements).
78. See Patricia Cashman, et al, FDIC Study of Bank Overdraft Programs v (FDIC Nov 2008), online at http://www.fdic.gov/bank/analytical/overdraft/ FDIC138-Report-Final-v508.pdf (visited Sept 11, 2013) ("FDIC Study") (reporting that the median dollar amount of debit-overdraft transactions was $20 and that these were the most frequent transactions).
79. See, for example, Editorial, That $35 Cup of Coffee, NY Times A22 (Nov 14, 2009).
80. See Lieber and Martin, Overspending on Debit Cards, NY Times at A1 (cited in note 77) (telling the story of a consumer who had deposited a check that had not yet cleared and then bought a cup of coffee, a few screws, a movie ticket, and other items, and ended up with $238 in overdraft fees that day); Board of Governors of the Federal Reserve System, Electronic Fund Transfers, 74 Fed Reg 59033, 59038 (2009) (final rule; official staff commentary) (noting that account holders can incur hundreds of dollars of fees in one day).
81. See Dennis Campbell, F. Asís Martínez-Jerez, and Peter Tufano, Bouncing Out of the Banking System: An Empirical Analysis of Involuntary Bank Account Closures, 36 J Bank & Fin 1224, 1224 (2012). In addition, over 8 percent of consumers who have voluntarily closed their bank accounts explain that they have chosen to be unbanked so as to avoid overdraft and bounced-check fees.
82. *26 figure 4.13 (FDIC Dec 2009), online at http://www.fdic.gov/householdsurvey/2009/full-report.pdf (visited Sept 11, 2013).
83. The number of days the overdraft can remain outstanding before a "sustained overdraft fee" kicks in varies from three to ten days. See Chris Friedrich, The High Cost of Opting In to Overdraft Fees (CreditCards.com Sept 13, 2010), online at http://www.creditcards.com/credit-card-news/overdraft- fees-opt-in-credit-card-act-1282.php (visited Sept 11, 2013).
84. See Government Accountability Office, Credit Cards: Credit Cards - Increased Complexity in Rates and Fees Heightens Need for More Effective Disclosures to Consumers, GAO-6-929, 18 (Sept 2006), online at http://www.gao.gov/new.items/d06929.pdf (visited Sept 11, 2013) (finding, among the most popular cards from major issuers in 2005, cash advance APRs were "around 20 percent on average").
85. See Mark Armstrong and John Vickers, Consumer Protection and Contingent Charges, 50 J Econ Lit 477, 480 & n 13 (2012),
86. *4 (UK Office of Fair Trading July 2008), online at http://www.oft.gov.uk/shared-oft/reports/financial-products/OFT1005. pdf (visited Sept 11, 2013).
87. See Andrew Martin and Ron Lieber, Overdraft Open Season, NY Times B1 (Feb 23, 2010) (reporting that industry consultant Michael Moebs estimated that $20 billion in bank revenue from ATM and nonrecurring debit transaction overdrafts occurred in 2009).
88. See Leslie Parrish and Josh Frank, An Analysis of Bank Overdraft Fees: Pricing, Market Structure and Regulation, 45 J Econ Issues 353, 357 (2011) (referencing findings that low-income and minority consumers are more likely than the general population to have overdrawn their checking accounts);
89. Cashman, et al, FDIC Study at v (cited in note 79) (finding that those who live in low-income zip codes are more likely than others to pay overdraft fees);
90. Protecting Consumers from Abusive Overdraft Fees: The Fairness and Accountability in Receiving Overdraft Coverage Act, Hearing on S 1799 before the Committee on Banking, Housing, and Urban Affairs, 111th Cong, 1st Sess 33, 35-36 (2009) (statement of Jean Ann Fox, Director of Financial Services, Consumer Federation of America).
91. Editorial, Debit Card Trap, NY Times A26 (Aug 20, 2009) (citing Moebs Services).
92. See Victor Stango and Jonathan Zinman, What Do Consumers Really Pay on Their Checking and Credit Card Accounts? Explicit, Implicit, and Avoidable Costs, 99 Am Econ Rev Papers & Proc 424, 424-25 (2009).
93. Some banks offer even more permutations. See, for example, Bob Sullivan, Banks' Hard Sell: Opt In for More Overdraft Fees, The Red Tape Chronicles (NBC News July 30, 2010), online at http://redtape.nbcnews.com/-news/2010/07/30/ 6345569-banks-hard-sell-opt-in-for-more-overdraft-fees?lite (visited Sept 11, 2013) (describing an overdraft program where the consumer pays $4.99 per month in exchange for the ability to overdraw the account by up to $30 without incurring an additional fee).
94. *10 (The PEW Charitable Trusts June 2012), online at http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/ Safe-Checking-in-the-Electronic-Age/Pew-Safe-Checking-Still-Risky.pdf (visited Sept 11, 2013).
95. *18 (cited in note 118) (explaining that the terminology banks use to describe their overdraft plans can result in consumer confusion).
96. With Courtesy Pay, SMCU Has You Covered (San Mateo Credit Union 2013), online at http://www.smcu.org/accounts/courtesy.php (visited Sept 11, 2013).
97. Standard Overdraft Services: Are You In? (Sovereign Bank 2011), online at http://www.sovereignbank.com/personal/promotions/sovereign-account-protector. asp (visited Sept 11, 2013).
98. Bounce Protection (Central National Bank 2013), online at https://www.centralnational.com/personal/bounceprotection.asp (visited Sept 11, 2013).
99. TD Debit Card Advance (TD Bank 2013), online at http://www.tdbank.com/ tdadvance (visited Sept 11, 2013).
100. Overdraft Privilege (First National Bank 2008), online at http://www.myfnbbank.com/index.php?option=com-content&task=view&id= 112&Itemid=124 (visited Sept 11, 2013).
101. *5, 9 n 6 (May 2012), online at http://www.pewhealth.org/uploadedFiles/PHG/Content-Level-Pages/Issue-Briefs/ SC-IB-Overdraft%20America.pdf (visited Sept 11, 2013). Even among very frequent overdrafters (those who overdrew more than ten times in the prior year), over half stated a preference that their nonrecurring transactions be declined. Id.
102. *4 (cited in note 126).
103. See David Benoit, Customers Opt In for Overdraft Protection, Wall St J C1 (Nov 26, 2010).
104. Consumer Financial Protection Bureau, CFPB Study of Overdraft Programs: A White Paper of Initial Data Findings 31 figure 5 (June 2013), online at http://files.consumerfinance.gov/f/201306-cfpb-whitepaper-overdraft-practices. pdf (visited Sept 11, 2013).
105. See Consumer Financial Protection Bureau, Press Release, CFPB Launches Inquiry into Overdraft Practices (Feb 22, 2012), online at http://www. consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-launches- inquiry-into-overdraft-practices (visited Sept 11, 2013). See also note 80 and accompanying text.
106. See Moebs Services, Overdraft Fee Revenue in the US Falls to $31.6 Billion in 2011 (Business Wire Mar 15, 2012), online at http://www. businesswire.com/news/home/20120315006272/en/Overdraft-Fee-Revenue-U.S. -Falls-31.6-Billion (visited Sept 11, 2013). Note that this figure reflects all overdraft fees, including those incurred on ATM, debit, check, or electronic transactions.
107. See, for example, Sullivan, Banks' Hard Sell (cited in note 117) (quoting a staff attorney at Consumers Union as saying that banks are targeting account holders who have a chronically low balance);
108. Martin and Lieber, Overdraft Open Season, NY Times at B1 (cited in note 90) (reporting that consultants were advising banks to "focus their pitch on the minority of customers who are responsible for the vast majority of overdraft fees").
109. See Laura Northrup, Opt In to Overdraft Protection Right at the ATM (Consumerist July 29, 2011), online at http://consumerist.com/2011/07/29/opt-in- to-overdraft-protection-right-at-the-atm (visited Sept 11, 2013).
110. See Laura Northrup, Chase Now Has Human ATM Greeter Who Helpfully Sells Overdraft Protection (Consumerist July 14, 2010), online at http://consumerist. com/2010/07/14/chase-installs-atm-greeter-who-sells-debit-card-overdraft- protection (visited Sept 11, 2013) (relaying a bank customer's experience of being confronted by a bank employee when withdrawing money from an ATM).
111. See Karen Weise, Reforms Fail to Halt Bank Revenue on Debit-Card Overdraft Fees (Bloomberg Oct 20, 2011), online at http://www.bloomberg.com/ news/2011-10-20/reforms-fail-to-halt-bank-revenue-on-debit-card-overdaft-fees. html (visited Sept 11, 2013);
112. Ben Popken, Chase Just Goes Ahead and Adds Overdraft Protection to Your Account (Consumerist Sept 16, 2010), online at http://consumerist.com/2010/09/ 16/chase-just-goes-ahead-and-adds-overdraft-protection-to-your-account (visited Sept 11, 2013).
113. Consumer Financial Protection Bureau, CFPB Study of Overdraft Programs: A White Paper of Initial Data Findings at 31-32 (cited in note 131).
114. See Ben Popken, Banks Luring You into Signing Back Up for High Overdraft Fees (Consumerist June 18, 2010), online at http://consumerist.com/2010/06/18/ banks-trying-to-get-you-to-sign-up-for-high-overdraft-fees (visited Sept 11, 2013);
115. Phil Villarreal, When It Comes to Overdraft Opt-In, Chase Won't Take No for an Answer (Consumerist Aug 6, 2010), online at http://consumerist.com/2010/ 08/06/when-it-comes-to-overdraft-opt-in-chase-wont-take-no-for-an-answer (visited Sept 11, 2013).
116. See, for example, Sullivan, Banks' Hard Sell (cited in note 117) (describing advertising materials and scare tactics banks used to get customers to opt out);
117. Popken, Banks Luring You (cited in note 145);
118. Martin and Lieber, Overdraft Open Season, NY Times at B1 (cited in note 90).
119. See Villarreal, When It Comes to Overdraft Opt-In, Chase Won't Take No for an Answer (cited in note 145).
120. *3-4 (Apr 2011), online at http://www.responsiblelending.org/overdraft-loans/policy-legislation/regulators/ CRL-OD-Survey-Brief-final-2-4-25-11.pdf (visited Sept 11, 2013).
121. *21 (Jan 2008), online at http://www.gao.gov/new.items/d08281.pdf (visited Sept 11, 2013).
122. *1 (SharePlus Federal Bank), online at https://secureforms. c3vault1.com/forms/shareplus/pdf/opt-in-details.pdf (visited Sept 11, 2013).
123. Center for Responsible Lending, Consumer Federation of America, and National Consumer Law Center, Comments at 15 (cited in note 78). Consumers who believe that they must opt out to avoid bouncing checks may feel compelled to opt out, given that in most states bouncing a check is a criminal offense and can even result in imprisonment. See Bad Check Laws by States (National Check Fraud Center 2011), online at http://www.ckfraud.org/penalties.html#criminal (visited Sept 11, 2013).
124. See Sandra Block, Prepaid Card Fees Can Hurt: If You Don't Choose Carefully, They Can Squeeze You Dry, USA Today 1B (Jan 18, 2011).
125. *1 (cited in note 148).
126. *4 (cited in note 126).
127. Popken, Chase Just Goes Ahead (cited in note 141).
128. See Ben Popken, Get Customers to Sign Up for Overdraft Fees or Get Fired (Consumerist Aug 3, 2010), online at http://consumerist.com/2010/08/03/getting- fired-for-not-tricking-customers-into-overdraft-fees (visited Sept 11, 2013);
129. Ben Popken, Branch Manager Quits rather than Trick Bank Customers into Signing Up for Overdrafts (Consumerist Aug 13, 2010), online at http://consumerist.com/2010/08/13/rather-than-trick-bank-customers-into-signing- up-for-overdrafts-branch-manager-quits (visited Sept 11, 2013).
130. See Ray Birch, Iowa CU's Face-to-Face Pitch Boosts Opt-Ins, 14 Credit Union J 11, 11 (May 31, 2010).
131. See, for example, Sullivan, Banks' Hard Sell (cited in note 117);
132. Martin and Lieber, Overdraft Open Season, NY Times at B1 (cited in note 90).
133. Don't Lose Your ATM & Debit Card Overdraft Protection (Lapeer County Bank & Trust Co 2010), online at http://www.lcbt.com/2747/mirror/ debitcardandatmoverdraftprotection.htm (visited Sept 11, 2013).
134. *1 (cited in note 150).
135. Sullivan, Banks' Hard Sell (cited in note 117).
136. Chase Debit Card Overdraft Coverage (JP Morgan Chase Bank 2013), online at http://demo.chase.com/presents/preview/pnt/non-pnt/add-overdraft-coverage. html (visited Sept 11, 2013)
137. *1 (cited in note 150) ("Maintain peace of mind with Triple-Protection.");
138. Standard Overdraft Services: Are You In? (cited in note 121) ("Enjoy the peace of mind of knowing your checks, debits, and payments are automatically honored by setting up an Overdraft Protection Plan.").
139. Bounce Advantage (Peoples Bank 2013) (on file with The University of Chicago Law Review).
140. Privilege Pay (Farmers Insurance Group Federal Credit Union 2013), online at https://www.figfcu.com/print.php?id=610 (visited Sept 11, 2013).
141. See Lieber and Martin, Overspending on Debit Cards, NY Times at A20 (cited in note 77).
142. See, for example, Overdraft Protection (Capital One 2013), online at http://www.capitalone.com/bank/overdraft-protection (visited Sept 11, 2013) ("Opting in is free and easy.");
143. Check Card Overdraft Protection for Your Wescom Checking Account (Wescom Credit Union 2011), online at https://www.wescom.org/accounts/ whyoptinoverdraftprotection.asp (visited Sept 11, 2013) ("Why Opt in to Check Card Overdraft Protection? It's Free.").
144. See Kristina Shampanier, Nina Mazar, and Dan Ariely, Zero as a Special Price: The True Value of Free Products, 26 Mktg Sci 742, 743 (2007).
145. See also David Adam Friedman, Free Offers: A New Look, 38 NM L Rev 49, 69-71 (2008) (discussing deceptiveness of "free" offers);
146. Chris Anderson, Free: The Future of a Radical Price 59 (Hyperion 2009): A single penny doesn't really mean anything to us economically. So why does it have so much impact? The answer is that it makes us think about the choice. That alone is a disincentive to continue. It's as if our brains were wired to raise a flag every time we're confronted with a price. This is the "is it worth it?" flag. If you charge a price, any price, we are forced to ask ourselves if we really want to open our wallets. But if the price is zero, that flag never goes up and the decision just got easier.
147. See Martha C. White, We Paid Almost $30 Billion in Overdraft Fees in 2011 (Time Jan 3, 2012), online at http://business.time.com/2012/01/03/we- paid-almost-30-billion-in-overdraft-fees-in-2011 (visited Sept 11, 2013) (quoting Susan Weinstock of PEW's finding from focus group interviews that "[m]any people think that choosing the bank's 'protection' means that they won't be charged an overdraft fee").
148. See Laura Northrup, TD Bank Sells Overdraft Protection as a "Free" Service (Consumerist Aug 11, 2010), online at http://consumerist.com/2010/08/11/td-bank-sells-overdraft-protection-as-a-free- service (visited Sept 11, 2013) (reporting that a consumer received a phone call from a bank representative who told him that that the bank's "overdraft protection" was "free" and only mentioned fees by saying that the fees for using the service "would stay the same").
149. *62 ("Debit card industry representatives explained that the account balance that is used to authorize a debitcard transaction - and which would be displayed to the consumer - may not necessarily reflect the true balance in the consumer's checking account at the time of the transaction.");
150. Cashman, et al, FDIC Study at iv (cited in note 79) (explaining the bank practice of processing withdrawals on a single day from largest to smallest, which maximizes the number of withdrawals that will overdraft the account and overdraft fee revenue).
151. But see Gutierrez v Wells Fargo Bank, NA, 730 F Supp 2d 1080, 1124 (ND Cal 2010) (holding transaction reordering for the purpose of inflating overdraft fees to be a fraudulent practice in violation of California state law).
152. *7 (cited in note 126) (finding that reading an account statement was the most common way consumers discovered that they had overdrawn their accounts, with about a quarter learning of the overdraft this way).
153. See also Bob Sullivan, Gotcha Capitalism: How Hidden Fees Rip You Off Every Day - and What You Can Do about It 60 (Ballantine 2007) (quoting a bank employee as stating: "Our focus is to get you to start using the debit cards so you can charge up those [overdraft] fees, because the purchases that you make will not show in your account until many days later").
154. *4 (cited in note 126).
155. *1 (cited in note 148) (emphasis omitted).
156. *1 (Public Service Credit Union 2010), online at https://www.mypscu.com/docs/odpletteronline.pdf (visited Sept 11, 2013).
157. Jim Bruene, Debit Card Overdraft Protection: 2 Steps Forward, 1.9 Back (Netbanker July 13, 2010), online at http://www.netbanker.com/2010/07/debit- card-overdraft-protection-2-steps-forward-19-back.html (visited Sept 11, 2013) (copied from the then-homepage of Horizons North Credit Union).
158. *9 (Consumer Federation of America Mar 30, 2010), online at http://www.consumerfed.org/elements/www.consumerfed.org/file/ FRB-Overdraft-Comment-3-30-10.pdf (visited Sept 11, 2013).
159. Screenshot on file with author. Relevant excerpt from screenshot also available at Oscar Valles, Chase Debit Card Overdraft Coverage and Chase Overdraft Protection Program (Oscar Valles July 17, 2010), online at http://oscarvalles.wordpress.com/2010/07/17/chase-debit-card-overdraft-coverage- and-chase-overdraft-protection-program (visited Sept 11, 2013) (describing one customer's experience of still being charged overdraft fees after opting out, and showing an image of the relevant text).
160. Center for Responsible Lending, et al, Comments on Regulations DD and E - Overdraft at Appendix (cited in note 193).
161. *1 (cited in note 77).
162. Important Information Affecting Your Overdraft Services (ABCO Federal Credit Union 2013), online at http://www.goabco.org/rege.cfm (visited Sept 11, 2013);
163. Important Information Affecting Your Checking Account (Athol Credit Union 2009), online at http://www.atholcreditunion.com/home/personal/odp (visited Sept 11, 2013).
164. *5, 30 (Investment Company Institute Nov 2011), online at http://www.ici.org/pdf/rpt- 11-dc-401k-fee-study.pdf (visited Sept 11, 2013).
165. Higher participation levels benefit employers because participation increases employee productivity and retention, particularly for those employees whom employers value more. See William E. Even and David A. Macpherson, Benefits and Productivity, in Olivia S. Mitchell, et al, eds, Benefits for the Workplace of the Future 43, 48-49 (Pennsylvania 2003).
166. See Jack M. Guttentag, Should Escrows Be Mandatory? (The Mortgage Professor July 2, 2007), online at http://www.mtgprofessor.com/A%20-%20Escrows/ should-escrows-be-mandatory.htm (visited Sept 11, 2013).
167. See Tamar Frankel, What Default Rules Teach Us about Corporations; What Understanding Corporations Teaches Us about Default Rules, 33 Fla St U L Rev 697, 699-700 (2006).
168. See J. Robert Brown Jr and Sandeep Gopalan, Opting Only In: Contractarians, Waiver of Liability Provisions, and the Race to the Bottom, 42 Ind L Rev 285, 309-10 (2009).
169. *20 (Dec 20, 2007) (concurring statement of Jon Leibowitz) ("Perhaps the best solution for consumers is a change in the widespread opt-out default for ⋯ tracking mechanisms to an opt-in default to allow consumers affirmatively to consent."). However, the Commission's most recent report in this area is unclear as to whether it believes do-not-track should be the default, track-me should be the default from which consumers could then opt out, or consumers should be required to make a choice between do-not-track and track-me.
170. *1 (Federal Trade Commission Mar 2012), online at http://www.ftc.gov/os/2012/03/ 120326privacyreport.pdf (visited Sept 11, 2013) (suggesting that privacy should be "the 'default setting' for commercial data practices"), with id at 52-55 (suggesting that consumers be given the "choice" not to be tracked for certain purposes). Further, what a do-not-track policy default would mean is unclear. Open questions include whether it would apply to websites users visit or only to third parties that use those websites to track users, whether it would prohibit collection of data for all purposes or for only specific purposes, and whether it would permit collection where the data is anonymized. See generally id (suggesting a regulatory framework for internet privacy). For illustrative purposes, this Article uses a simplified construct of a do-not-track policy default: no tracking by any party for any purpose without explicit user consent.
171. See, for example, James Temple, Privacy Worries Persist on Tracking, San Francisco Chronicle D1 (Mar 7, 2012) ("Targeting ads based on search queries, sites visited, stories read and social connections forms the core of the multimillion-dollar business models of many online companies, including Google, Yahoo and Facebook.").
172. See, for example, Brendan S. Maher, Some Thoughts on Health Care Exchanges: Choice, Defaults, and the Unconnected, 44 Conn L Rev 1099, 1112 (2012) ("A regulator can choose a default such that a person can 'one-click' for default coverage of a specified quality and price, and make the default option a prominent option of the exchange website.");
173. *10-12 (Kleimann Communication Group and Consumers Union July 9, 2012), online at http://consumersunion.org/wp-content/uploads/ 2013/02/Choice-Architecture-Report.pdf (visited Sept 11, 2013) (describing how current computerized health plan chooser tools similar to those that the exchanges will use usually provide consumers with a short default list of plans on the first computer screen, selected using metrics chosen by the exchange and a few pieces of information about the consumer).
174. See, for example, Maria Aspan, Law Hits Home as Cards Opt Out of Overlimit Fees, 174 Am Banker 1 (Aug 10, 2009) (explaining that card issuers are eliminating over-the-limit fees because the prospective returns are no longer worth the costs to issuers).
175. See US Centers for Disease Control and Prevention, New York: Some Catholic Officials Urge Parents to Opt Out of Mandated Sex Education (The Body Aug 11, 2011), online at http://www.thebody.com/content/63488/new-york-some- catholic-officials-urge-parents-to-o.html (visited Sept 11, 2013).
176. See Erik DeLue, Default Medicine: What We Need for EOL Care (Today's Hospitalist Feb 2011), online at http://todayshospitalist.com/index.php?b= articles-read&cnt=1172 (visited Sept 11, 2013) (advocating making do-not-resuscitate the default for the terminally ill);
177. Daniel J. Brauner, Reconsidering Default Medicine, 58 J Am Geriatrics Socy 599, 600 (2010) (suggesting changing the default from life-sustaining feeding to comfort feeding for the terminally ill).
178. It might appear that the user's browser stands between the user and websites, given that one way a user could opt out of a do-not-track default might be by changing a setting on her browser, which would send a signal to websites conveying the user's status as having opted out. See Do Not Track (Electronic Frontier Foundation), online at https://www.eff.org/issues/do-not- track (visited Sept 11, 2013). However, browsers cannot prevent tracking. When Microsoft announced that the next version of its browser would set do-not-track as the default, firms that track web users promptly announced that they would not follow the instruction.
179. See Ryan Singel, IE 10's "Do Not Track" Default Dies Quick Death: Outrage from Advertisers Appears to Have Hobbled Microsoft's Renegade Plan (Ars Technica June 7, 2012), online at http://arstechnica.com/information- technology/2012/06/ie-10s-do-not-track-default-dies-quick-death (visited Sept 11, 2013).
180. Even if browsers could prevent tracking, websites could lobby users to opt out of the default with respect to their website, provide perks to users who opt out, or even set opting out as a condition of accessing the site. See Edward J. Janger and Paul M. Schwartz, The Gramm-Leach-Bliley Act, Information Privacy, and the Limits of Default Rules, 86 Minn L Rev 1219, 1244 (2002) (expressing skepticism that a privacy-protective default would be sticky because firms would give consumers incentives to opt out or would condition the receipt of services on opting out).
181. See Henrik Cronqvist and Richard H. Thaler, Design Choices in Privatized Social-Security Systems: Learning from the Swedish Experience, 94 Am Econ Rev Papers & Proc 424, 424 (2004).
182. *3, 23-26 (unpublished dissertation, The University of Chicago Graduate School of Business, 2005), online at http://web.econ.unito.it/cerp/ Appuntamenti/Conferenza%202005/paper%20e%20presentazioni/Cronqvist05.pdf (visited Sept 11, 2013).
183. See, for example, Alan L. Gustman, Thomas L. Steinmeier, and Nahid Tabatabai, Do Workers Know about Their Pension Plan Type? Comparing Workers' and Employers' Pension Information, in Annamaria Lusardi, ed, Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Savings Programs 47, 59, 61 table 2.4 (Chicago 2008) (presenting evidence from 2004 that nearly 40 percent of employees could not accurately identify whether they had a defined benefit or defined contribution plan);
184. Shlomo Benartzi and Richard H. Thaler, Naive Diversification Strategies in Defined Contribution Saving Plans, 91 Am Econ Rev 79, 96 (2001) (showing that employees understand the investment options in their defined contribution plans so poorly that they often divide their money evenly among the options rather than attempting to construct a balanced portfolio).
185. See, for example, Bernard S. Black, Is Corporate Law Trivial?: A Political and Economic Analysis, 84 Nw U L Rev 542, 557 (1990) (arguing that corporate law defaults are so slippery as to be trivial because even small corporations consult attorneys - experts who understand the default and alternatives to it well).
186. *21 table 9 (SSRN Working Paper Series, Sept 29, 2009), online at http://ssrn.com/abstract=1478214 (visited Sept 11, 2013) (finding that only 48 percent of users know that their internet use currently can be tracked across multiple websites without their consent);
187. Opinion Surveys: What Consumers Have to Say about Information Privacy; Hearing before the Subcommittee on Commerce, Trade and Consumer Protection of the Committee on Energy and Commerce, 107th Cong, 1st Sess 7-11 (2001) (statement of Lee Rainie, Director, Pew Internet & American Life Project) ("[T]he majority of Internet users ⋯ feel they are anonymous online unless they take affirmative steps to disclose information about themselves.").
188. *4-5 (Carnegie Mellon University CyLab Apr, 2 2012), online at http://www.cylab.cmu.edu/files/ pdfs/tech-reports/CMUCyLab12007.pdf (visited Sept 11, 2013);
189. *4-8 (Carnegie Mellon University CyLab Nov 10, 2009), online at http://www.cylab.cmu.edu/files/ pdfs/tech-reports/CMUCyLab09015.pdf (visited Sept 11, 2013). Most consumers falsely believe that the law restricts website use of consumer information significantly.
190. *21 table 9 (cited in note 224).
191. *3 (Pew Research Center's Internet & American Life Project Mar 9, 2012), online at http://pewinternet.org/~/media/Files/Reports/ 2012/PIP-Search-Engine-Use-2012.pdf (visited Sept 11, 2013).
192. *4 (cited in note 34).
193. Aleecia M. McDonald, et al, A Comparative Study of Online Privacy Policies and Formats, 5672 Lecture Notes in Comp Sci 37, 50 (2009).
194. *4, 20-25 (cited in note 210).
195. See James J. Choi, David Laibson, and Brigitte C. Madrian, Reducing the Complexity Costs of 401(k) Participation through Quick Enrollment, in David A. Wise, ed, Developments in the Economics of Aging 57, 58 (Chicago 2009) (finding that, even without the participation default, giving employees a way to enroll at a default contribution rate with a default investment allocation increased participation rates dramatically).
196. *28-29 (NBER Working Paper 16887, Mar 2011), online at http://www.nber.org/papers/w16887 (visited Sept 11, 2013).
197. See, for example, Patricia A. Norberg, Daniel R. Horne, and David A. Horne, The Privacy Paradox: Personal Information Disclosure Intentions versus Behaviors, 41 J Consumer Affairs 100, 118 (2007) (finding that people say they are willing to provide less personal information than they actually provide due partly to different perceptions of risk and trust when asked about intentions as compared to actual disclosure settings);
198. James P. Nehf, Shopping for Privacy on the Internet, 41 J Consumer Affairs 351, 359 (2007).
199. See Arthur Schram and Joep Sonnemans, How Individuals Choose Health Insurance: An Experimental Analysis, 55 Eur Econ Rev 799, 804 (2011) (experimentally finding that people select health insurance policies by satisficing on one attribute at a time, rather than by making tradeoffs).
200. See Jonathan Baron and Mark Spranca, Protected Values, 70 Org Beh & Human Dec Processes 1, 5-6 (1997).
201. This does not mean that the boundary conditions on policy defaults identified here are an exhaustive list. For example, where consumers perceive the default to have been selected by a party with opposing interests, they often opt out. See Christina L. Brown and Aradhna Krishna, The Skeptical Shopper: A Metacognitive Account for the Effects of Default Options on Choice, 31 J Consumer Rsrch 529, 537 (2004). Thus, if consumers believe policymakers have set a policy default without consumers' best interests in mind, they might reject it on that basis.
202. In this respect, policy defaults are no different than disclosure regulation for complex consumer products; disclosure can only make consumer markets function well when paired with substantive regulation limiting product complexity. See Lauren E. Willis, Decisionmaking and the Limits of Disclosure: The Problem of Predatory Lending: Price, 65 Md L Rev 707, 820-24 (2006) (proposing a combination of disclosure and substantive regulation so that the disclosure is useful for price shopping among home mortgages).
203. *50-52 (cited in note 207) (explaining the FTC's view that in some circumstances, it is acceptable for companies to condition use of their products or services on accepting tracking or to offer consumers who opt out lower prices or other benefits).
204. *31-32 (Federal Reserve Bank of Chicago Working Paper No 2009-07, Oct 2009), online at http://www.chicagofed.org/digital-assets/ publications/working-papers/2009/wp2009-07.pdf (visited Sept 11, 2013).
205. *49 (cited in note 207) (noting a "choice 'fatigue'" problem when web users are repeatedly asked to opt out);
206. Ayres, 121 Yale L J at 2069 (cited in note 4) (noting the problem that some altering rules are ineffective because people become "habituated to the speed bumps").
207. See, for example, Ayres, 121 Yale L J at 2080-83 (cited in note 4) (discussing "password" altering rules, which require parties to be sufficiently sophisticated about the transaction or the law to know the password required to opt out of policy defaults).
208. Consider Gamers Opt Out, online at http://www.gamersoptout.com (visited Sept 11, 2013) (assisting video game players to opt out of firm-set defaults that waive the civil justice defaults, including class action waivers, arbitration clauses, and so forth).
209. A study in Australia, where for three years after filing for bankruptcy debtors cannot obtain credit of any kind, found that debtors improved their cash management strategies significantly during this period. Further, most debtors believed the reality of lacking access to credit did not sink in and alter their behavior until six to twelve months into the experience. See Martin Ryan, The Last Resort: A Study of Consumer Bankrupts 247 (Avebury 1995).
210. Lieber and Martin, Overspending on Debit Cards, NY Times at A20 (cited in note 77) (reporting the opinion of Michael Moeb).
211. See Aleecia M. McDonald and Lorrie Faith Cranor, The Cost of Reading Privacy Policies, 4 I/S: J L & Pol Info Socy 540, 560 & table 7 (2008) (estimating based on 2008 data that, if consumers read the privacy policies of each website they visited, the average annual time spent doing so would be 244 hours, or more than half of the time consumers spend on average using the internet each year).
212. See National Do Not Call Registry, online at http://www.donotcall.gov (visited Sept 11, 2013) (allowing individuals to place their phone numbers on a list of numbers telemarketers are prohibited from calling).
213. Tracking technology can now avoid leaving any trace on the user's computer. See Peter Eckersley, How Unique Is Your Web Browser?, in Mikhail J. Atallah and Nicholas J. Hopper, eds, Privacy Enchancing Technologies 1, 3 (Springer 2010) (explaining a tracking system that is effective even when a user has deleted cookies and that "leaves no persistent evidence of tagging on the user's computer").
214. Central Hudson Gas & Electric Corp v Public Service Commission of New York, 447 US 557, 564 (1980).
215. Edenfield v Fane, 507 US 761, 770-71 (1993).
216. See International Society for Krishna Consciousness, Inc v Lee, 505 US 672, 707 (1992) (Kennedy concurring).
217. Zauderer v Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 US 626, 651 (1985).
218. See Kesten C. Green and J. Scott Armstrong, Evidence on the Effects of Mandatory Disclaimers in Advertising, 31 J Pub Pol & Mktg 293, 297 (2012) (reviewing past experimental studies of the effects of mandatory disclaimers and finding that all such disclaimers increased consumer confusion and most were ineffective or led consumers to make worse decisions).
219. See, for example, Molly Mercer, Alan R. Palmiter, and Ahmed E. Taha, Worthless Warnings? Testing the Effectiveness of Disclaimers in Mutual Fund Advertisements, 7 J Empirical Legal Stud 429, 433-34 (2010).
220. Compare Discount Tobacco City & Lottery, Inc v United States, 674 F3d 509, 518 (6th Cir 2012) (holding graphic tobacco warnings constitutional),
221. with RJ Reynolds Tobacco Co v Food & Drug Administration, 696 F3d 1205, 1221-22 (DC Cir 2012) (holding the same warnings unconstitutional). The Supreme Court will likely hold the graphic tobacco warnings unconstitutional.
222. Consider Borgner v Florida Board of Dentistry, 537 US 1080, 1082 (2002) (Thomas dissenting from denial of certiorari) (suggesting that compelled commercial speech must "directly advance[]" the government's interest to survive First Amendment scrutiny, not merely bear some reasonable relationship to the government's interest);
223. United States v United Foods, Inc, 533 US 405, 416 (2001) (indicating that the "reasonably related" test for compelled commercial speech only applies when that speech is necessary to make commercial speech "nonmisleading").
224. David G. Yosifon, Resisting Deep Capture: The Commercial Speech Doctrine and Junk-Food Advertising to Children, 39 Loyola LA L Rev 507, 552-55 (2006). This is not to say that the First Amendment commercial speech doctrine could not be reconceived, see id at 560-83, but unlike Professor Yosifon, I do not believe that it is on the visible horizon of American courts' jurisprudence.
225. *19 (cited in note 118). Note, however, that PEW envisions this as a separate informational document rather than as a document that could be physically check marked or electronically clicked by consumers to select among overdraft coverage options. In addition, the PEW disclosure would require substantive changes in the law that would constrain the choices banks could offer to consumers (the PEW disclosure collapses overdrafts occasioned by ATM, nonrecurring debit, check, and recurring payment transactions into a single treatment) and the pricing structure used by banks for those choices (the PEW disclosure presents all costs as flat fees).
226. See, for example, Itamar Simonson, Choice Based on Reasons: The Case of Attraction and Compromise Effects, 16 J Consumer Rsrch 158, 160-62 (1989).
227. See, for example, Omri Ben-Shahar and Carl E. Schneider, The Failure of Mandated Disclosure, 159 U Pa L Rev 647, 709-29 (2011) (explaining why consumers do not read, understand, or use disclosures).
228. Equity Predators: Stripping, Flipping and Packing Their Way to Profits; Hearing before the Special Committee on Aging, 105th Cong, 2d Sess 30-37 (1998) (statement of "Jim Dough," former employee of a predatory lender, testifying anonymously).
229. *9 (BioMed Central Public Health 2012), online at http://www.biomedcentral.com/content/pdf/1471-2458-12-139.pdf (visited Sept 11, 2013).
230. See Standard Overdraft Service: Are You In? (cited in note 121).
231. See Theresa M. Marteau, et al, Judging Nudging: Can Nudging Improve Population Health?, 342 Brit Med J 263, 265 (2011) ("Without regulation to limit the potent effects of unhealthy nudges in existing environments shaped largely by industry, nudging towards healthier behaviour may struggle to make much impression.").
232. See generally Eric J. Johnson and Daniel Goldstein, Do Defaults Save Lives?, 302 Science 1338 (2003).
233. See Kyle Powys Whyte, et al, Nudge, Nudge or Shove, Shove - The Right Way for Nudges to Increase the Supply of Donated Cadaver Organs, 12 Am J Bioethics 32, 36 (Feb 2012) (explaining that nudgers need to be more sensitive to the context in which the nudge is executed, as this context will determine the success of the nudge);
234. Tom Baker and Timothy D. Lytton, Allowing Patients to Waive the Right to Sue for Medical Malpractice: A Response to Thaler and Sunstein, 104 Nw U L Rev 233, 239-40 (2010) (arguing that making nonwaiver of the right to sue for medical malpractice the default would not prevent healthcare providers from exploiting patients' cognitive biases to convince patients to opt out).
235. *2-3 (cited in note 21) (explaining the need for regulators to take into account firm responses to behaviorally-informed policymaking - that is, nudges).
236. See, for example, Wyatt Buchanan, Social-Networking Sites Face New Privacy Battle, SFGate (San Francisco Chronicle May 14, 2011), online at http://www.sfgate.com/bayarea/article/Social-networking-sites-face-new-privacy- battle-2371641.php (visited Sept 11, 2013) (reporting on a social networking site lobbying against the internet-privacy policy default);
237. Stacy Kaper, Overdraft Bill Held Up as Rhetoric Heats Up; Sponsors See Some Room for Compromise as Both Sides Dig In, 172 Am Banker 1 (Sept 27, 2007) (reporting on banking industry opposition to the overdraft policy default).
238. Professor David Laibson has explained how another tool advocated by nudgers, RECAP, could benefit sophisticated consumers at the expense of unsophisticated consumers. RECAP would allow consumers to take their past use history of a service and input the data into a computer tool, which then obtains complex pricing information from available service providers, analyzes the consumer's expected cost of buying the service from the providers, and tells consumers which provider is likely to be the least expensive for their use pattern. See Emir Kamenica, Sendhil Mullainathan, and Richard Thaler, Helping Consumers Know Themselves, 101 Am Econ Rev Papers & Proc 417, 417-18 (2011). As Professor Laibson has detailed, RECAP enables firms to price discriminate in a new way. Firms can offer generally high-priced products with a few good deals hidden among their offerings. Sophisticated consumers will find those good deals using the RECAP tools. Unsophisticated consumers are unlikely to use the RECAP tools and thus unlikely to find the good deals. Sophisticated consumers might make smarter choices due to RECAP. But firms might recoup their losses from sophisticated consumer choices by raising prices on services sold to unsophisticated consumers. These ideas were expressed in David Laibson's comments on Kamenica, Mullainathan, and Thaler's paper at the American Economics Association Annual Meeting in 2011.