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National Consumer Protection Week and Disclosure 3.0

posted by Jean Braucher

It’s National Consumer Protection Week (NCPW)!   Federal, state, local, and nonprofit consumer protection agencies and organizations are making extra efforts to promote consumer awareness

First I have to get out of my system thoughts of Tom Lehrer’s song, National Brotherhood Week:

                Step up and shake the hand/Of someone you can’t stand . . .

                It’s only for a week so have no fear/Be grateful that it doesn’t last all year.

But to get back on message, of particular interest to Credit Slips readers is this part of the mission of consumer protection described on the NCPW website:

    "Financial Fraud Scams: American consumers owe a whopping $11.31 trillion dollars in debt and are behind on paying about $1.01 trillion of that amount. Mortgages, student loans, and credit cards account for a large portion of that debt. Consumers are often haunted with huge monthly payments, and fraudsters take advantage of that with debt relief scams, tax scams, and other financial fraud scams. Scams target individuals who are in financial distress, but they fail to fulfill their promises, and typically leave consumers worse off than when they started."

Let me say that Lauren Willis has done a great job on this site recently taking us, patiently and painstakingly, through the many problems with the idea that disclosure can be refined into a digital juggernaut to protect consumers. See here  and here and here.

I’m all for disclosure as a first line of consumer defense, particularly useful to the most savvy, but let’s do it simply and quickly, recognizing its limits, and get back to the main task of going after scammers and exploiters who systematically study human weaknesses and then harness them for their own gain.  Disclosure can't do much about that, so we’re always going to need a lot of substantive consumer protection, too.

A central idea in disclosure 3.0 is facilitating apps for evaluating credit products.  So let the products get more and more intricate and then provide consumers with data dumps on their own usage, to be passed by them to app platforms.  Really?  Smart phone usage is growing (Lauren, even I have one!) but app usage is growing more slowly.  Even once everyone is tech ready for this brave new world, what a great new line for scammers, especially those who are also hackers.  Access to all information about a consumer’s credit use!  Oh boy!  Have we got a deal for you!

Millions of people a year are tricked into sending money over the Internet and by wire and check for nothing in return. My favorite is the “free puppy” scam (just wire money first for shots and shipping and perhaps surgery for the poor sick puppy).  Millions more consumers end up in high-cost debt traps carefully designed and then redesigned to be one step ahead of consumer understanding and regulatory enforcement. More refined disclosure is not the solution to these problems.  Warnings and preventive examination for too much complexity are more like it.  See Scam Alert!  And the CFPB examination manual

“We are all consumers” is a line I hear much too often from lawyers and law professors, and it's about as accurate as “One size fits all.”  Disclosure can only do a small amount to advance the core mission of consumer protection, which is to prevent as much exploitation as possible of the most vulnerable consumers.


In this multi-cultural nation, we cannot assume that all consumers will even understand the disclosures. How many scammers have provided disclosures which were written in such convoluted ways using college vocabulary words that only a Harvard graduate can understand they are being taken for a ride? I agree that is it time to standardize disclosures while making them understandable to even those with a basic understanding of English as these are the groups which are most likely to be mislead.

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