The guidance covers how these practices may violate federal law and highlights examples of illegal arrangements, including a new consumer-facing tool the bureau is creating to protect consumers.
03/12/2024 4:10 P.M.
1.5 minute read
In an effort to curb deceptive practices in online comparison-shopping for financial products, the Consumer Financial Protection Bureau recently issued a circular to law enforcement agencies and regulators on cracking down on rigged results and dark patterns.
The world of online comparison-shopping for financial products like credit cards and loans can be a treacherous landscape, the bureau said, with hidden kickbacks and manipulative tactics often lurking beneath the surface.
The core issue is the prevalence of comparison-shopping tools that, instead of providing impartial advice, steer consumers toward certain products or lenders due to undisclosed financial incentives. The circular explains how these practices may violate federal law and highlights examples of illegal arrangements.
“Americans turn to online comparison tools to find the credit card with the lowest interest rates or best rewards,” said CFPB Director Rohit Chopra. “The CFPB is working to ensure that digital advertisements for financial products are not disguised as unbiased and objective advice.”
The guidance highlights the insidious nature of “dark patterns,” deceptive user experiences and interfaces designed to trick consumers into selecting inferior products or paying higher prices. These practices not only harm consumers but also create an uneven playing field, benefiting companies engaging in deceitful tactics at the expense of honest businesses and consumers.
Evidence suggests anti-competitive behavior and high levels of concentration in the consumer credit card market. Large banks have been found to offer worse credit card terms and interest rates compared to smaller institutions, resulting in significant financial burdens for consumers. To address this disparity, the CFPB is developing a consumer-facing tool to provide transparent information and promote greater competition in the credit card market.
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CFPB Circular Outlines Enforcement of “Dark Patterns”
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