Study finds a disclosure that helps: text alerts

by Jeff Sovern

Regular readers of the blog know that we often write about the ineffectiveness of disclosures, and plenty of others have the same complaint.  But here's a bit of good news: a study by Michael Grubb, Paul Adams, Andrea Caflisch, Darragh Kelly, and Jeroen Nieboer, and Matthew Osborne, discussed at a recent FDIC Consumer Research Symposium, found that when consumers are told about an impending overdraft in an account (it was the British equivalent of a checking account), many take action.  The slides from the talk are here  and the audio is here.  Of course, texts warning of a problem are different from a sheaf of disclosures at the outset of a transaction, but it's nice to know that notice sometimes helps. A question raised in the Q&A does raise a concern, however: will consumers overlook the texts if they become too common?

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