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Coercive "Consent" to Paperless Statements

posted by Adam Levitin

If you've logged on to any sort of on-line financial account in the past few years, there's a very good chance that you've been asked to consent to receive your periodic statements electronically, rather than on paper. Financial institutions often pitch this to consumers as a matter of being eco-friendly (less paper, less transportation) or of convenience (for what Millennial wants to deal with paper other than hipsters with their Moleskines). While there is something to this, what's really motivating financial institutions first and foremost is of course the cost-savings of electronic statements. Electronic statements avoid the cost of paper, printing, and postage. If we figure a cost of $1 per statement and 12 statements per year, that's a lot of expense for an account that might only have a balance of $3,500—roughly 34 basis points annually.

I'm personally not comfortable with electronic statements for two reasons. First, I worry about the integrity of electronic records. I have no way of verifying the strength of a bank's data security, and I assume that no institution is hack proof. Indeed, messing around with our financial ownership record system would arguably be more disruptive to the United States than interference with our elections. FDIC insurance isn't very useful if there aren't records on which to base an insurance claim. Of course, the usefulness of a bank statement from two weeks ago for determining the balance in my account today is limited too, but if I can prove a balance at time X, perhaps the burden of proof is on the bank (or FDIC) to prove that it has changed subsequently. 

Now, I recognize that not everyone is this paranoid about data integrity. Even if you aren't, however, paper can play an important role in forcing one to pay attention to one's financial accounts, and I think that's valuable.  I am much more likely to ignore an email than I am a paper letter in part because I know that the chance the paper letter is junk is lower because it costs more to send than the spam.  As a result, I look at my snail mail, but often let my e-mail pile up unread. And even when I read, I don't always click on the link, which is what would be in an electronic bank statement.  Getting the paper bank statement effectively forces me to look at my accounts periodically, whereas an emailed link to a statement wouldn't. And monitoring one's accounts is just generally a good thing--it helps with fraud detection and helps one know one's financial status.  

So here's where this is going:  I've got no issue if a consumer wants to freely opt-in to electronic statements.  But the way my financial institutions communicate with me when I go on-line involves really coercive choice architecture. One bank presents me with a pre-checked list of accounts to be taken paperless, such that to not go paperless I have to uncheck several boxes.  I am essentially opted-in to paperless. Another bank has a prominent "I agree" button without an equivalent "I decline" button-the only way to decline paperless is to find the small link labeled "close" to close the pop-up window. "Consent" in this circumstances strikes me as iffy. This strikes me as an area in which regulators (I'm looking at you CFPB) really ought to exercise some supervisory muscle and tell banks to cut it out. If folks want to go paperless, that's fine, but don't try and coerce them. Doing so is contrary to the spirit of the E-SIGN Act at the very least and might enter into UDAAP territory.

Post-script:  this is a great example of where behavioral economics matters in consumer finance--it explains why the choice architecture used by banks is what it is.

Post-script II:  the source of a legal requirement for paper statements is unclear to me. EFTA requires a periodic statement for accounts that may be accessed electronically, but never says that it has to be in writing. There's no paper statement requirement in TISA or in the UCC as far as I know. The only thing I can think of is a CFPB Official Interpretation of Reg E implementing the EFTA that says "A financial institution may permit, but may not require, consumers to pick up their periodic statements at the financial institution." Perhaps a link to a website is "picking up" the statement, rather than delivery.

E-SIGN provides that it does not require anyone to accept electronic records, but the fact that E-SIGN doesn't require it seems irrelevant to whether a bank fulfills its EFTA obligation with an electronic record, as EFTA is about the provision of a record, not the acceptance thereof.  But maybe I'm just misreading something or am missing the legal source for a paper statement requirement--if so, I'd be happy to be directed to it. 


Every once in a while a fraudulent charge will appear on credit cards so it is important to stay on top of statements, but here is a simple fix that I think should catch most/all discrepancies . . .

Download excel or some other spreadsheet app on your smartphone. Each credit card gets its own tab. Three columns: transaction date, amount, and vendor. At the top is a running balance using the sum of the amount column. To keep it tidy, for payments on the cards I use negative amounts and myself as the vendor. With some discernible lag your running balance should generally match the balance on your credit card's own app.

Of course, this requires some labor every time you use a credit card, though if you're the type that stresses enough to require paper statements I think it's a more efficient method than balancing books the old-fashioned way.

See 15 USC 7001(c)(1)(B)(i) which provides that providing records in electronic firm is contingent, in part, on "(i)informing the consumer of (I) any right or option of the consumer to have the record provided or made available on paper or in nonelectronic form, and (II) the right of the consumer to withdraw the consent to have the record provided or made available in an electronic form and of any conditions, consequences (which may include termination of the parties’ relationship), or fees in the event of such withdrawal;"

Note that this just allows consumer to opt-out of electronic form - it does not force provision of paper. However other laws requiring periodic statements mean that there must be some type of statement provided and non-electronic likely means paper.

There is an NCLC paper policy aspects of this topic here: https://www.nclc.org/images/pdf/banking_and_payment_systems/paper-statements-banking-protections.pdf

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