Disclosure Issues Continue

by Jeff Sovern

It seems as if we have constant reminders that consumer disclosures work poorly. The latest: Kiplinger reports on an interview with the CFPB's student loan ombudsman, Rohit Chopra, in which Chopra said:

We’re finding that borrowers often don’t understand the difference between federal and private student loans, that many didn’t realize the difference between variable and fixed interest rates, and that many did not know that income-based repayment protections do not extend to private loans.

And yet, disclosure continues to be a standard--and all too often the chief--remedy for consumer confusion. Only yesterday a New York Times editorial on overdraft issues stated that the CFPB "should require financial institutions to clearly explain their overdraft programs and include complete pricing information about different overdraft options."  That's true, and disclosures are important, but there is ample reason to believe that disclosures alone are not enough to help many consumers make decisions.  More is needed.  I've written in the past about requring the use of mortgage counselors, and I hope to blog about another thing that might help in the near future.

Comments

[Brian]

Good point, Jeff. We blogged earlier on this topic. This has been CFPB's priority from the beginning. [BTW, the last two links in this post are to the same item.]