Innovation, Ethics, and Consumer Protection

Abstract

In recent years, firms that rely on fintech to develop and deliver financial products and services have become increasingly important in the banking and financial sector. Nevertheless, fintech products raise various ethical and legal issues, particularly relating to consumer rights. These issues can be analyzed in the light of behavioral law and economics which suggest that prevalent cognitive biases systematically affect the judgment of individuals. To mitigate this bounded rationality, it is possible to guide the decision-making processes through the use of nudges and configured sets of choices. A good example is fintech gamification, defined as the use of game-related mechanisms in other areas, particularly websites or social networks. However, the use of nudges for commercial purposes is often associated with some form of manipulative tactics explicitly aimed at exploiting individuals' biases without their consent. In this context, recourse to the law is useful as it provides for the minimum requirements needed to regulate the relationship between a firm and its customers.