The Consumer Financial Protection Bureau and the Quest for Consumer Comprehension
3 Russell Sage Foundation Journal of the Social Sciences 74 (2017)
21 Pages Posted: 14 Apr 2017
Date Written: April 13, 2017
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 these disclosures perform in experiments, firms will run circles around the disclosures 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 financial 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, Consumer Financial Protection Bureau
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