On February 29, 2024, the CFPB issued a circular to law enforcement agencies and regulators explaining how companies operating comparison-shopping tools can break the law when they steer consumers to certain products or lenders because of kickbacks. The CFPB found some comparison-shopping tools manipulate results or use digital dark patterns because of incentive payments from lenders. The circular explains how these practices may violate federal law and highlights examples of illegal arrangements.
The CFPB’s circular provides guidance on how consumer financial protection laws apply to comparison shopping for other financial products. It also discusses how regulators and law enforcement agencies can evaluate operators of comparison-shopping tools that accept payments from financial firms to manipulate results or suppress options that may better fit the consumer's stated preferences.
According to the CFPB’s press release, some operators use dark patterns to manipulate consumers by tricking them into paying higher prices or selecting inferior products. In the previous years, the CFPB has taken enforcement actions for this kind of violation including against ACTIVE Network and TransUnion.
The CFPB added that it has found evidence of practices that may imply anti-competitive behavior in the consumer credit card market, as well as high levels of concentration in the industry. In a recent report by the CFPB, data showed that large banks are offering worse credit card terms and interest rates than small banks and credit unions, regardless of credit risk. Thus, the CFPB is developing a consumer-facing tool that, once finished, will bring more price transparency to credit card comparison-shopping. The tool will help consumers shopping for a credit card to have an unbiased way of comparing credit card terms and interest rates.
Read the CFPB’s press release here.
Read the circular here.