The Consumer Financial Protection Bureau and the Quest for Consumer Comprehension

Financial Reform: Preventing the Next Crisis, Michael S. Barr, ed., 2016, Forthcoming

Loyola Law School, Los Angeles, Legal Studies Research Paper Series No. 2016-02

39 Pages Posted: 17 May 2015 Last revised: 25 Aug 2016

Lauren E. Willis

Loyola Law School Los Angeles

Date Written: February 2, 2016

Abstract

To ensure that consumers “understand [financial products’] costs, benefits, and risks,” the Consumer Financial Protection Bureau has been redesigning mandated disclosures, primarily through iterative lab testing. But no matter how well disclosures perform in experiments, firms will run circles around them when studies end and marketing begins. To meet the challenge of the dynamic twenty-first century consumer financial marketplace, the Bureau should require firms to demonstrate that a good proportion of their customers understand key pertinent facts about the products they buy. Comprehension rules would induce firms to inform consumers and simplify products, tasks that firms are better equipped than the Bureau to perform.

Keywords: consumer finance, performance standards, disclosures, deception, comprehension

Suggested Citation

Willis, Lauren E., The Consumer Financial Protection Bureau and the Quest for Consumer Comprehension (February 2, 2016). Financial Reform: Preventing the Next Crisis, Michael S. Barr, ed., 2016, Forthcoming; Loyola Law School, Los Angeles, Legal Studies Research Paper Series No. 2016-02. Available at SSRN: https://ssrn.com/abstract=2606373 or http://dx.doi.org/10.2139/ssrn.2606373

Lauren E. Willis (Contact Author)

Loyola Law School Los Angeles ( email )

919 Albany Street
Los Angeles, CA 90015-1211
United States
213-736-1086 (Phone)
213-380-3769 (Fax)

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