Lauren E. Willis of Loyola Los Angeles has written what looks like another important article, The Consumer Financial Protection Bureau and the Quest for Consumer Comprehension. Here is the abstract:
To ensure that consumers “understand [financial products’] costs, benefits, and risks,” the CFPB has been redesigning mandated disclosures, primarily through iterative lab testing. But no matter how well disclosures perform in experiments, firms will run circles around them when studies end and marketing begins. To meet this challenge, the Bureau should require firms to demonstrate that their customers understand the products they buy. Comprehension rules would induce firms to educate consumers and to simplify products, tasks that firms are better equipped than the Bureau to perform. Such performance-based regulation is crucial for adaptive management of the dynamic twenty-first century consumer financial marketplace.
