The Consumer Financial Protection Bureau (CFPB) is working to crack down on companies that operate comparison-shopping tools for financial products and manipulate the results.
The CFPB issued a circular to law enforcement agencies and regulators that explains how these companies can break the law when they accept kickbacks and use deceptive practices, according to a Thursday (Feb. 29) press release.
“The CFPB is working to ensure that digital advertisements for financial products are not disguised as unbiased and objective advice,” CFPB Director Rohit Chopra said in the release.
Consumers rely on these comparison-shopping tools to evaluate credit cards, loans and bank accounts, and make informed decisions, according to the release.
However, many of these consumers encounter manipulated results that violate federal law, the release said. For example, digital dark patterns and deceptive user experiences are used to trick consumers into paying higher prices or selecting inferior products.
The CFPB has also found evidence of anti-competitive behavior in the credit card market, per the release. It has also found that large banks often offer worse terms and interest rates than small banks and credit unions.
The circular released by the CFPB Thursday is part of a broader effort to level the playing field for consumers in different markets for financial products and services, according to the release.
“Many digital comparison-shopping tools hold themselves out as providing unbiased and objective advice,” the press release said. “The guidance 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.”
The CFPB has also undertaken several other efforts to increase competition in the credit card market. The agency said Feb. 16 that it is promoting switching through open banking, scrutinizing bait-and-switch tactics on credit card rewards, clamping down on junk fees and promoting comparison shopping.
Looking ahead, the CFPB plans to release data on credit card pricing and availability every six months, and to develop a consumer-facing tool that will enable individuals seeking new credit cards to compare terms and interest rates in an unbiased manner.