RSSCompanies operating comparison-shopping tools can violate the law by sending consumers to certain products or lenders because of kickbacks, according to a Feb. 29 Consumer Financial Protection Bureau circular to law enforcement agencies and regulators.
According to the CFPB, though many digital comparison-shopping tools are portrayed as a source of unbiased and objective information, consumers often see manipulated results or digital dark patterns — interfaces manipulated to fool users into acquiring overpriced or inferior services — caused by unseen incentive payments from lenders.
“Consumers often rely on the tools to navigate difficult financial decisions,” according to the CFPB. “However, some tool operators take advantage of that reliance and manipulate results. For example, some operators might accept financial kickbacks, sometimes referred to as ‘bounties’ within the industry, to manipulate lists of results displayed to shoppers.”
In 2022, the CFPB sued online event registration company ACTIVE Network for allegedly fooling customers registering for fundraising road races and other events into signing up for its annual subscription discount club. The bureau has also sued TransUnion for reportedly making it difficult for customers to cancel some subscription services, and sued Credit Karma for allegedly tricking customers with fraudulent credit offers.
“Americans turn to online comparison tools to find the credit card with the lowest interest rates or best rewards,” said CFPB Director Rohit Chopra. “The CFPB is working to ensure that digital advertisements for financial products are not disguised as unbiased and objective advice.”
According to the CFPB, there is potential evidence of anti-competitive behavior in the consumer credit card market as well as high degrees of concentration. Large banks are reportedly offering inferior credit card terms and interest rates compared to credit unions and small banks, regardless of credit risk.
The CFPB is developing a tool which would allow consumers trying to find a credit card an objective way to compare credit card interest rates and terms, the agency said.
