HELPING BUYERS BEWARE: THE NEED FOR SUPERVISION OF BIG RETAIL

Introduction Mass consumer goods are a $ 2.6 trillion dollar industry accounting for 23% of household expenditures. 1 Despite this scale, the sector's dominant firms - such as Amazon, Target, Clorox, and Kraft - operate with little consumer protection oversight of the type found in consumer finance. 2 It is typically assumed that consumers should spend the time necessary to find the best deal or be held responsible for the price they paid on simple items like clothing, food, cleaning products, and household appliances. The commercial and regulatory landscape in consumer goods today mirrors that in consumer finance prior to 2008. For years before the 2008 financial crisis, federal regulators mostly ignored the large body of scholarship arguing that financial institutions were becoming increasingly sophisticated at systematically exploiting consumers. 3 The typical response was that consumers could handle it - that with a little effort and research they could understand simple concepts such as monthly mortgage payments or credit card late fees. 4 After the 2008 crisis a consensus emerged across the political spectrum that regulation may be needed in the face of the financial industry's practices. 5 Congress responded in part by adopting then-Professor Elizabeth Warren's suggestion, later articulated in greater depth with Professor Oren Bar-Gill, to create a new federal agency to oversee credit product safety on behalf of consumers. 6 The response can be seen as a paradigm shift toward examining firms' data to correct market failures resulting from consumer irrationality and information asymmetries. ...