Policy Watch: Research Priorities on Disclosure at the Consumer Financial Protection Bureau

Abstract

The Consumer Financial Protection Bureau (CFPB) has authority over several consumer financial protection laws that include mandatory disclosures to provide consumers with the information needed to make financial decisions. Mandatory disclosure is a common regulatory tool that presents opportunities to support consumers in their decision making; however, many aspects of disclosure effectiveness remain understudied. The CFPB is committed to studying mandatory disclosure to better inform policy makers about whether and how best to use disclosures to achieve policy goals. This research effort focuses on three primary areas: (1) identifying how the dimensions of a disclosure influence its efficacy; (2) examining how different methodologies should best be deployed for disclosure testing; and (3) studying the market effects of mandatory disclosures, particularly through firms’ responses. The CFPB will use a range of methodologies for this research, including qualitative and quantitative testing of disclosures, laboratory studies, field trials, survey research, and administrative data analysis. The authors hope that identifying these critical questions will encourage the academic community to contribute policy-relevant research.

Helping consumers to evaluate annual percentage rates (APR) on credit cards.

“…Beyond the specific disclosure that we studied here, our findings point to the benefits of experimental comparisons and quantitative evaluations for developing consumer-facing information, a methodological choice advocated by previous authors (Perry & Blumenthal, 2012). As such, our research contributes to growing efforts among researchers and policymakers to make disclosures more effective (e.g., Chin & Beckett, 2018;Johnson & Leary, 2017;Lacko & Pappalardo, 2010;Kleimann, 2013). Such work is essential for creating meaningful disclosure policy and for effectively informing consumer decision making.…”

Denial Without Determination: The Impact of Systemic Market Access Denial on Consumer Power and Market Engagement

“…This implication is particularly important considering these short-term, high-interest loans are often utilized to cover recurring expenses and, accordingly, must be renewed considerably more frequently to cover these expenses than capital gained through traditional means (Koku and Jagpal 2015). Although many look to regulatory bodies such as the Consumer Financial Protection Bureau to enact and enforce these policies (Horn 2017; Johnson and Leary 2017; Stewart 2017), recent changes to the Bureau make regulation of predatory loan industries unclear (Cowley 2018). This means that the targeting of these vulnerable consumers who cannot secure capital through traditional means could potentially accelerate, especially considering the low perceived power of vulnerable consumers (Baker, Gentry, and Rittenburg 2005).…”

Don't watch me read: how mere presence and mandatory waiting periods affect consumer attention to disclosures

“…In recent years, policy-makers have become increasingly interested in studying the effects of disclosures (e.g., Lacko & Pappalardo, 2007; Johnson & Leary, 2017). However, there are many questions about whether disclosures are effective, how they can be made more effective or whether policy-makers should consider other approaches (Perry & Blumenthal, 2012).…”

“…Consumers receive disclosures to help them make many decisions, including those about health care insurance, online privacy rights, electricity use and mortgages (Ben-Shahar & Schneider, 2014). Yet existing research provides limited insight into the real-world factors that affect disclosure use, as few studies have used field experiments to examine consumer responses to disclosures (Hogarth & Merry, 2011; Perry & Blumenthal, 2012; Johnson & Leary, 2017). Instead, the majority of policy and academic research on disclosures has used laboratory methods (e.g., Lacko & Pappalardo, 2010; Chin & Bruine de Bruin, in press).…”