WASHINGTON— The Consumer Financial Protection Bureau (CFPB) has 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.”
While consumers often use comparison-shopping tools to evaluate the costs, features, and terms of many financial products, including credit cards at credit unions and other accounts, the Bureau said they often “encounter manipulated results or digital dark patterns, fueled by behind-the-scenes incentive payments from lenders.”
Although many such comparison tools benefit consumers, the CFPB said “some tool operators take advantage of that reliance and manipulate results.”
Examples Cited
As an example, it said some operators might accept financial kickbacks, sometimes referred to as “bounties” within the industry, to manipulate lists of results displayed to shoppers.
In the new circular the CFPB said it is providing guidance on how consumer financial protection laws apply to comparison shopping for other financial products. Comparison-shopping tools can heavily influence a consumer's selection of a financial product.
“Many digital comparison-shopping tools hold themselves out as providing unbiased and objective advice,” the CFPB 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.”
Dark Patterns in Comparison Shopping
According to the CFPB, Dark patterns are a common tool used to manipulate consumers.
“Operators of comparison-shopping tools may deceive consumers with user experiences and user interfaces that lead people to believe they are the beneficiaries of competition,” the CFPB said. “However, if consumers are being tricked into paying higher prices or selecting inferior products, the comparison-shopping company and the company paying-to-play may be the only ones benefiting from the façade of competition.”
The CFPB is warning that dark patterns can violate consumer financial protection laws, and the agency has taken enforcement actions against violators. As examples, the CFPB noted it sued ACTIVE Network for illegally cramming consumers with junk membership fees, and sued TransUnion for using dark patterns to make it difficult for consumers to cancel certain subscription services. The Federal Trade Commission has also taken action, including a lawsuit against Credit Karma for tricking consumers with deceptive “Pre-Approved” credit offers.
Tool Being Developed
To help foster greater competition in this important market, the CFPB reported it is developing a consumer-facing tool that, once finished, will “bring more price transparency to credit card comparison-shopping. Consumers shopping for a credit card will have an unbiased way to compare credit card terms and interest rates.”
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