by Jeff Sovern
[S]ome evidence suggests that many consumers choose the course of least resistance. An unintentional experiment in automobile insurance in New Jersey and Pennsylvania illustrates the point. Pennsylvania policies provided that consumers could bring a certain claim, but offered them the choice of paying lower rates in exchange for foregoing the right to bring the claim. Approximately 75% decided to keep the right to sue. By contrast, New Jersey policies did not permit drivers to bring the claim, but offered them the right to do so if they paid higher rates. About 20% agreed to pay the higher rates. In other words, most motorists did not deviate from the default choice. Eric J. Johnson, John Hershey, Jacqueline Meszaros and Howard Kunreuther, Framing, Probability Distortions, and Insurance Decisions in CHOICES, VALUES, AND FRAMES 224-40 (D. Kahneman and A. Tversky, eds. 2000).
AT&T's market study concluded that most customers “would stop reading and discard the letter” after reading this disclaimer. AT&T did not change the substance of the letter as a result of its market research -- indeed, internal AT&T documents indicate that the letter was specifically intended to make customers less alert to the details of the CSA.
[W]hen presented with the prospect of lessening burden and saving costs by providing a streamlined, short form privacy notice containing only certain key information – some in the industry seem to balk. Marketing departments get uneasy because simple and straightforward disclosure of a bank’s information sharing policies and an easy means for customers to opt out of that sharing might mean – that customers will actually understand those policies – and decide to opt out! The tension here is that shorter, focused consumer disclosures can meaningfully reduce regulatory burden, but, if they are done well, they will also empower consumers to make some decisions that a particular bank may not like.