Rule2024-05141
Consumer Financial Protection Circular 2024-01: Preferencing and Steering Practices by Digital Intermediaries for Consumer Financial Products or Services
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 12, 2024
Issuing agencies
Consumer Financial Protection Bureau
Abstract
The Consumer Financial Protection Bureau (Bureau or CFPB) has issued Consumer Financial Protection Circular 2024-01, titled, "Preferencing and steering practices by digital intermediaries for consumer financial products or services." In this circular, the Bureau responds to the question, "Can operators of digital comparison- shopping tools or lead generators violate the Consumer Financial Protection Act (CFPA) by preferencing products or services based on financial or other benefits to the operator?"
Full Text
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<title>Federal Register, Volume 89 Issue 49 (Tuesday, March 12, 2024)</title>
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[Federal Register Volume 89, Number 49 (Tuesday, March 12, 2024)]
[Rules and Regulations]
[Pages 17706-17710]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-05141]
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CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part X
Consumer Financial Protection Circular 2024-01: Preferencing and
Steering Practices by Digital Intermediaries for Consumer Financial
Products or Services
AGENCY: Consumer Financial Protection Bureau.
ACTION: Consumer financial protection circular.
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SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB) has
issued Consumer Financial Protection Circular 2024-01, titled,
``Preferencing and steering practices by digital intermediaries for
consumer financial products or services.'' In this circular, the Bureau
responds to the question, ``Can operators of digital comparison-
shopping tools or lead generators violate the Consumer Financial
Protection Act (CFPA) by preferencing products or services based on
financial or other benefits to the operator?''
DATES: The Bureau released this circular on its website on February 29,
2024.
ADDRESSES: Enforcers, and the broader public, can provide feedback and
comments to <a href="/cdn-cgi/l/email-protection#d390baa1b0a6bfb2a1a093b0b5a3b1fdb4bca5"><span class="__cf_email__" data-cfemail="d390baa1b0a6bfb2a1a093b0b5a3b1fdb4bca5">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory
Implementation & Guidance Program Analyst, Office of Regulations, at
202-435-7700 or at: <a href="https://www.reginquiries.consumerfinance.gov/">https://www.reginquiries.consumerfinance.gov/</a>. If
you require this document in an alternative electronic format, please
contact <a href="/cdn-cgi/l/email-protection#3d7e7b6d7f627c5e5e584e4e545f54515449447d5e5b4d5f135a524b"><span class="__cf_email__" data-cfemail="80c3c6d0c2dfc1e3e3e5f3f3e9e2e9ece9f4f9c0e3e6f0e2aee7eff6">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Question Presented
Can operators of digital comparison-shopping tools or lead
generators violate the Consumer Financial Protection Act (CFPA) by
preferencing products or services based on financial or other benefits
to the operator?
Response
Yes. Operators of digital comparison-shopping tools can violate the
prohibition on abusive acts or practices if they distort the shopping
experience by steering consumers to certain products or services based
on remuneration to the operator. Similarly, lead generators can violate
the prohibition on abusive practices if they steer consumers to one
participating financial services provider instead of another based on
compensation received. Where consumers reasonably rely on an operator
of a digital comparison-shopping tool or a lead generator to act in
their interests, the operator or lead generator can take unreasonable
advantage of that reliance by giving preferential treatment to their
own or other products or services through steering or enhanced product
placement, for financial or other benefits.
Background
For many households, the process of shopping for a financial
product or service now includes interactions with digital
intermediaries. These intermediaries include websites, applications, or
chatbots that operate as comparison-shopping tools, which consumers
turn to for help with researching, comparing, and selecting consumer
financial products or services. Offering a comparison-shopping tool for
consumers and generating leads for financial companies can and
sometimes do operate as distinct business models, and for the purposes
of this circular, comparison-shopping tools and lead generators are
discussed separately. However, consumers often interact with them in
similar ways and many digital intermediaries operate as both,
presenting themselves as consumer-serving comparison-shopping tools
while simultaneously increasing profits by directing leads based on
financial benefit. Digital intermediaries commonly receive remuneration
or other benefits, sometimes referred to as ``bounties'' by market
participants.
Digital Comparison-Shopping Tools
Consumers are increasingly using digital comparison-shopping tools
to find consumer financial products or services that fit their
interests.\1\ These tools facilitate comparison shopping by presenting
information about the costs, features, or other terms for a set of
comparable financial products or services, such as credit cards,
student loans, and savings accounts, offered by different providers. In
addition to presenting options offered by third-party providers of
financial products and services, some operators of digital comparison-
shopping tools offer their own financial products and services and
include their own options in the comparison-shopping tool.
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\1\ As used in this circular, the term ``digital comparison-
shopping tools'' includes both tools that overtly recommend certain
products as well as tools that have the effect of affirmatively
influencing consumers' likelihood of selecting or engaging with
information about various consumer financial products and services.
The term encompasses ``Digital Mortgage Comparison-Shopping
Platforms,'' which are addressed in a recent advisory opinion
regarding the Real Estate Settlement Procedures Act. See Digital
Mortgage Comparison-Shopping Platforms and Related Payments to
Operators, 88 FR 9162 (Feb. 13, 2023). The term also encompasses
some ``digital marketing providers,'' which are discussed in a
recent interpretive rule regarding the CFPA definition of ``service
providers.'' See Limited Applicability of Consumer Financial
Protection Act's ``Time or Space'' Exception with Respect to Digital
Marketing Providers, 87 FR 50556 (Aug. 17, 2022). The scope of this
circular, however, is different than the scope of either of those
prior documents. This circular addresses all digital comparison-
shopping tools that provide recommendations for or comparisons among
any consumer financial products or services and addresses potential
violations under the abusive prong of the CFPA.
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Comparison-shopping information can be presented in a static or
interactive format. In the latter case, some operators allow people who
use the tool to sort options based on different criteria or to
otherwise customize the presentation of information and options
(sometimes after a default presentation). Also, some operators collect
information from consumers and then purport to provide a list of
options tailored to the consumers' particular circumstances or
preferences. In other cases, operators just present an ordered list of
recommended providers. Increasingly,
[[Page 17707]]
digital comparison-shopping tools are using algorithms that order
recommendations or ranking lists based on multiple variables, such as
consumer characteristics, product features, consumer ratings, the
likelihood a consumer would be approved, various click-through and
application completion or approval rates, and provider compensation or
bids.
Operators of digital comparison-shopping tools enter various types
of commercial arrangements with providers of consumer financial
products and services that participate in a comparison-shopping tool.
Some operators receive revenue in exchange for the provision of time or
space for advertising that is clearly set apart from the content of the
comparison-shopping tool, like banner ads or pop-up advertisements.\2\
This kind of advertising is not at issue in this circular.
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\2\ Factors that inform whether advertisements are separate from
the content of a comparison-shopping tool include whether content is
completely visually separate from the presentation of product
recommendations or results, such that paid content is not embedded
or intertwined with a tool's presentation of product rankings or
recommendations, and whether paid content is presented as a
recommendation from the comparison-tool operator. However, the
question of whether advertising content is separate from a
comparison-shopping tool is fact specific and will often include
consideration of other factors.
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Instead, this circular focuses on compensation arrangements from
providers for preferential treatment by an operator of a digital
comparison-shopping tool. Operators are sometimes paid by product
providers on a fee-per-action basis--for example, by receiving fees per
click, per application, per conversion, per offer, or per sale. Often,
operators allow firms to bid against each other for advantageous
placement by paying bounties, which can be targeted at customers
fitting the characteristics a provider wants to acquire or aimed at
meeting certain volume goals. The degree to which these bounties affect
product placement depends on the operator's business model and the
weight given to provider compensation over other factors.
Lead Generation
Lead generators in lending markets sell information about
prospective customers to lenders. Lead generators sometimes perform
this function without making any contact with the consumer--selling
data on consumers as a specialty data broker. But these entities also
collect data directly from consumers by advertising websites that
present themselves as helping consumers get a loan or connect with
lenders.\3\
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\3\ See, e.g., Compl., FTC v. ITMedia Sols. LLC, No. 2:22-cv-
00073 (C.D. Cal. Jan. 5, 2022) (alleging that lead generator
unlawfully used a ``loan application'' form to collect consumers'
information by deceptively presenting itself as connecting consumers
with lenders).
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When consumers submit their information to a lead generator
indicating an interest in obtaining a loan, the lead generator sells
the consumer's information to lenders to complete a loan transaction.
Lead generators decide which lender obtains a lead based on a variety
of criteria depending on the firm. They sometimes deploy algorithms to
use many variables simultaneously to make these automated decisions,
similar to digital comparison-shopping tools. Sometimes lead generators
collect more information from consumers to assist lenders in
determining whether to purchase a lead, and lead generators sometimes
perform underwriting or origination tasks on behalf of partner lenders.
In fact, in some cases the automated decision on which a lender obtains
a lead can be so quick that the consumer's user experience between
navigating to a lead generator's website and obtaining a loan can be
continuous.
Similar to compensation agreements for operators of digital
shopping tools, lead generators are paid by participating lenders using
a variety of pricing models. Payments can similarly be charged as a
fee-per-action, such as for each lead, or each completed application.
Lenders sometimes pay for a number of leads, or a number of leads
meeting certain criteria. And, similarly, some lead generators send
leads to providers who bid the highest for a specific type of lead.\4\
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\4\ See, e.g., Am. Compl., CFPB v. D & D Marketing, Inc., No.
2:15-cv-09692 (C.D. Cal. June 30, 2016) (alleging unfair and abusive
acts or practices where lead aggregator ordered sales based
primarily on the price providers would pay for leads).
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Analysis and Findings
The CFPA prohibits covered persons or service providers from
engaging in any unfair, deceptive, or abusive act or practice.\5\ An
act or practice in connection with the provision of a consumer
financial product or service is abusive if it ``takes unreasonable
advantage'' of certain circumstances, including ``the reasonable
reliance by the consumer on a covered person to act in the interests of
the consumer.'' \6\
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\5\ Although this circular focuses on the reasonable-reliance
prong of the abusive prohibition, conduct discussed in this circular
can also violate other prongs of the abusive prohibition under 12
U.S.C. 5531(d), 12 U.S.C. 5531 and 5536(a)(1)(B)'s prohibitions
against unfair or deceptive acts or practices, or other Federal,
State, or local laws.
\6\ 12 U.S.C. 5531(d)(2)(C). See generally CFPB, Policy
Statement on Abusive Acts or Practices, at 17-18 (April 3, 2023),
<a href="https://files.consumerfinance.gov/f/documents/cfpb_policy-statement-of-abusiveness_2023-03.pdf">https://files.consumerfinance.gov/f/documents/cfpb_policy-statement-of-abusiveness_2023-03.pdf</a> (discussing reasonable-reliance abusive
prong).
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Protecting and facilitating people's ability to effectively compare
and choose among options for consumer financial products or services is
among the core statutory objectives of the CFPB.\7\
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\7\ Under the CFPA, a central purpose of the CFPB is to promote
``fair, transparent, and competitive'' markets. 12 U.S.C. 5511(a).
Moreover, CFPA legislative history highlights that an important
purpose of the CFPB is to ensure that ``a consumer can shop and
compare products based on quality, price, and convenience without
having to worry about getting trapped by the fine print into an
abusive deal.'' S. Rep. No. 111-176, at 11, 229 (2010).
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Below, this circular first addresses how an operator of a digital
comparison-shopping tool or a lead generator might leverage consumer
reliance to take unreasonable advantage of consumers where the operator
or lead generator preferences particular providers or products over
others in exchange for financial or other benefits to the operator, as
opposed to making presentation or lead distribution decisions using
other factors not relating to the operator or lead generator's relative
compensation from different providers. The circular then provides
examples of potentially abusive acts or practices by digital
comparison-shopping tool operators.
CFPA Section 1031(d)(2)(C) Elements
Reasonable Reliance by the Consumer on a Covered Person To Act in the
Interests of the Consumer
Digital comparison-shopping tool operators and lead generators can
qualify as ``covered persons'' under CFPA section 1031(d)(2)(C). An
operator or lead generator is a ``covered person'' if it offers or
provides consumer financial products or services or is an affiliate of
a person that offers or provides consumer financial products or
services and acts as a service provider by including those products in
the tool or providing leads.\8\ Depending on the role that a digital
comparison-shopping tool or lead generator plays in a consumer's
shopping experience, it may be extending or brokering the credit
products that consumers ultimately receive.\9\ In addition, some
digital comparison-shopping tools and lead generators may be providing
financial
[[Page 17708]]
advisory services to consumers as well.\10\
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\8\ See 12 U.S.C. 5481(6) (defining ``covered person''); 12
U.S.C. 5481(26) (defining ``service provider'').
\9\ See 12 U.S.C. 5481(5), (15)(A)(i).
\10\ See 12 U.S.C. 5481(5), (15)(A)(viii).
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Additionally, some operators or lead generators offer their own
version of the consumer financial product or service that consumers
seek to compare using the digital comparison-shopping tool or for which
leads are generated--for example, where an operator of a credit-card
digital comparison-shopping tool offers its own card on the tool. Other
operators or lead generators offer consumer financial products or
services of a different type from what consumers are using a tool to
compare or for which leads are generated--for example, an operator of a
credit-card digital comparison-shopping tool might use pop-up
advertisements to promote credit-counseling or credit-repair services
offered by itself or an affiliate.
Reasonable Reliance
Consumers sometimes reasonably rely on digital comparison-shopping
tool operators or lead generators to act in their interests. Operators
of digital comparison-shopping tools and lead generators can engender
reasonable consumer reliance by virtue of playing the role of helping
people select providers. They can also engender reasonable consumer
reliance by virtue of their explicit and implicit representations and
communications.
In particular, reasonable consumer reliance can exist because of a
digital comparison-shopping tool's function in a market, such as when a
tool operator assumes the role of acting on behalf of consumers or
helping them to select products or services based on the consumer's
interests.\11\ The nature of people's interactions with the tool
informs an evaluation of the digital comparison-shopping tool's
function in the market. For example, consumers may reasonably rely on a
tool that functions by ``matching'' people with consumer financial
products or services, i.e., providing curated recommendations based
partly on information provided by the consumer.
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\11\ See generally CFPB, Policy Statement on Abusive Acts or
Practices, at 17-18 (April 3, 2023), <a href="https://files.consumerfinance.gov/f/documents/cfpb_policy-statement-of-abusiveness_2023-03.pdf">https://files.consumerfinance.gov/f/documents/cfpb_policy-statement-of-abusiveness_2023-03.pdf</a>.
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In addition, if an operator explicitly or implicitly holds its tool
out as presenting information based on the interests of the consumer,
it may be reasonable for consumers to rely on the tool to function
accordingly. A tool operator sometimes explicitly holds itself out as
presenting information based on the interests of the consumer by
directly stating so, such as by, for example, claiming its
recommendations are objective.
An operator can also implicitly hold itself out as presenting
information based on the interests of the consumer even if it does not
explicitly claim to make objective recommendations. For example, the
operator may emphasize its ``expertise'' in helping consumers evaluate
options; describe its tool as providing ``research-based'' rankings of
options for consumers; state to consumers that it will ``help you
today'' to ``achieve your financial goals''; purport to match consumers
with the ``best'' or ``right'' offers; or claim to ``put consumers
first'' or to provide a ``one stop shop'' with all the information
consumers need to make informed selections among potential providers.
In some contexts, background conditions, such as an association
with a trusted institution, could factor into consumers' reasonable
reliance on a digital comparison-shopping tool (e.g., a financial aid
and student loan advisory website that is associated with a college or
university).\12\ Other factors, such as evidence that consumers using
the tool tend to not understand that elements of the tool's rankings or
recommendations are influenced by financial considerations, also
contribute to establishing the existence of reasonable consumer
reliance.
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\12\ Additionally, a comparison-shopping site operator or lead
generator can also attempt to generate trust and reliance by falsely
presenting a relationship with a trusted institution. See, e.g.,
CFPB, Consumer Financial Protection Circular 2022-02: Deceptive
representations involving the FDIC's name or logo or deposit
insurance (May 17, 2022), <a href="https://www.consumerfinance.gov/compliance/circulars/circular-2022-02-deception-representations-involving-the-fdics-name-or-logo-or-deposit-insurance/">https://www.consumerfinance.gov/compliance/circulars/circular-2022-02-deception-representations-involving-the-fdics-name-or-logo-or-deposit-insurance/</a> (CFPB
circular addressing deceptive misuse of the FDIC logo in
representations about deposit insurance); Compl., FTC v. Career
Education Corporation, No. 1:19-cv-05739 (N.D. Ill. Aug. 27, 2019)
(Career Education Corporation purchased sales from lead generators
that falsely represented they were affiliated with the U.S.
military).
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Relatedly, consumer-facing lead generators can engender reasonable
consumer reliance within the meaning of CFPA section 1031(d)(2)(C)
through their role as intermediating between consumers and lenders and
their explicit or implicit communications to consumers. In particular,
when lead generators conceal their real role in the market and present
themselves as a tool for consumers to connect with trusted lenders or
receive the best available terms for a consumer financial product or
service, given the consumer's individual circumstances, a consumer
would likely be reasonable in relying on the entity to act in the
consumer's interests.\13\
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\13\ See, e.g., Compl., FTC v. ITMedia Sols. LLC.
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Interests of the Consumer
Adjusting a digital comparison-shopping tool's presentation of
consumer financial products and services based on fees or other
benefits to tool operators will often not be in the interests of the
consumer. In many cases where consumers use digital comparison-shopping
tools, consumers have an interest in navigating a complex financial
market to obtain products that are best for them. Consumer interests
are not served when they are steered toward more expensive or less
favorable products because those products are offered by the tool
operator or its affiliates or because those products generate more
revenue for the tool operator.
Similarly, consumer interests are not served when consumers are
steered to more expensive or less favorable products by lead generators
because one provider is bidding more for the lead than another.\14\
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\14\ See, e.g., Compl., FTC v. Blue Global, LLC, No. 2:17-cv-
2117 (D. Ariz. July 3, 2017) (Blue Global collected loan
applications and promised to match consumers with loans that had the
best interest rates, finance charges, and repayment periods when, in
fact, they indiscriminately sold leads.).
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Unreasonable Advantage
A digital comparison-shopping tool operator or lead generator can
take unreasonable advantage of the reasonable consumer reliance
described above when they operate a business model that gives
preferential treatment, such as through steering, to particular
consumer financial products or services to increase financial or other
benefits to the tool operator. For example, the operator may be taking
unreasonable advantage of the consumer's reasonable reliance if the
operator is able to generate more interest in its own financial
products or services or is able to increase fees charged to third-party
providers because the tool functions in a way that engenders the
consumer's reasonable, but misguided, reliance on the tool to present
information in a manner consistent with the interests of the consumer.
In addition, benefits that accrue to the operator or lead generator
include direct financial compensation or indirect or non-financial
benefits, such as the ability to gather data that indirectly increases
the operator's or lead generator's ability to obtain financial or other
benefits.\15\
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\15\ See CFPB, Policy Statement on Abusive Acts or Practices, at
8 (April 3, 2023), <a href="https://files.consumerfinance.gov/f/documents/cfpb_policy-statement-of-abusiveness_2023-03.pdf">https://files.consumerfinance.gov/f/documents/cfpb_policy-statement-of-abusiveness_2023-03.pdf</a> (discussing
monetary and non-monetary advantages, including ``increased market
share, revenue, cost savings, profits, reputational benefits, and
other operational benefits'').
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[[Page 17709]]
Enforcers should closely examine the specific details of bounty or
bidding schemes when making a determination of abusive conduct. If a
digital comparison-shopping tool operator or lead generator requires
providers to bid or set bounties for leads, and that compensation
scheme increases overall revenue while impacting placement on a
comparison-shopping website or mobile app or impacting who receives
leads, that can suggest that the operator or lead generator is
violating the prohibition on abusive acts or practices. The reason is
commonsensical: if the tool operator or lead generator receives a
higher fee from one provider than another and provides preferential
treatment as a result, this can suggest that the lead generator or
operator is making decisions based on its own benefit and not in
consumers' interests. This concern may be somewhat mitigated when a
comparison-shopping tool operator or lead generator receives
compensation from providers, but does not consider such compensation in
its decisions regarding placement or, similarly, regarding which
providers receive a lead.\16\
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\16\ A digital comparison-shopping tool operator or lead
generator can face greater risk that the exclusion of non-paying
providers from its service would constitute an abusive act or
practice if a very low number of providers is included within a
service. Similarly, in the context of digital mortgage comparison-
shopping platforms, the CFPB has advised that, all other things
being equal, ``presenting a greater number of comparison options
rather than fewer'' generally reduces the risk of a violation of
section 8 of the Real Estate Settlement Procedures Act. 88 FR 9162,
9167 (Feb. 13, 2023).
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Unreasonable advantage-taking can also occur where the operator
benefits by steering consumers toward products or services--including
its own or those of its affiliates--that are more costly or otherwise
less desirable than what consumers might otherwise prefer.\17\ In
addition, it can occur where an operator leverages an affiliation or
informal connection with a trusted institution, such as a college or
university, to increase the operator's revenue while making
recommendations not based on factors likely to be consistent with
consumer interests.
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\17\ While evidence of harm to consumers can bolster a
determination that an entity is taking unreasonable advantage of
consumers, the text of CFPA section 1031(d)(2)--in contrast to the
definition of ``unfairness'' in CFPA section 1031(c)(1)--does not
require ``substantial injury'' to consumers as a prerequisite for
establishing abusive conduct. Compare 12 U.S.C. 5531(c)(1)(A), with
12 U.S.C. 5531(d)(2).
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Examples of Preferencing or Steering Arrangements
The following is a non-exhaustive list of examples that illustrate
arrangements where an operator of a digital comparison-shopping tool or
a lead generator steers consumers to certain consumer financial
products or services in exchange for financial or other benefits to the
operator or lead generator, regardless of the interests of the
consumer. These arrangements can be abusive if the operator or lead
generator takes unreasonable advantage of the consumer's reasonable
reliance on the operator or lead generator to act in the interests of
the consumer.
<bullet> A tool operator presents a product (or set of products)
that is preferred because of financial considerations in a placement
that is more likely to be seen, reflects a preferential ordering, has
more dynamic design features, requires fewer clicks to access product
information, or otherwise increases the likelihood that a consumer will
consider or select the preferred product.\18\ This can include self-
preferencing where the digital comparison-shopping tool promotes the
products or services of the tool operator.
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\18\ See generally FTC, Bringing Dark Patterns to Light, at 2
(Sept. 2022) (discussing ``design practices that trick or manipulate
users into making choices they would not otherwise have made and
that may cause harm'').
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<bullet> A tool operator presents certain options as ``featured''
because they are provided by the operator or a third-party provider
that paid for enhanced placement.\19\
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\19\ Consumers may be less likely to have the impression that a
product is being presented as being in the consumer's interest if a
tool operator presents sponsored or other advertising content that
is completely visually separate from the presentation of product
recommendations or results and the advertisement itself is not
presented as a recommendation.
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<bullet> A tool operator directs consumers to the products that pay
higher fees within a product category--for example, an operator
routinely matches consumers with a loan provider because it pays the
highest fee per application.
<bullet> A tool operator receives different payment based on
whether the digital comparison-shopping tool meets a certain threshold
volume allocation of leads generated within a set period of time, and
uses steering practices to increase the likelihood the operator will
satisfy volume allocation requirements. For example, in a 14-day
period, a provider pays fees only if at least 1,000 applications are
generated, and, on day 13, the operator is more likely to steer
consumers to that provider's products until the allocation is met.
<bullet> A tool operator or lead generator uses dynamic bidding or
a bounty system to determine which offers are presented to consumers
with certain demographic or other characteristics.
<bullet> A tool operator expressly or implicitly presents the total
set of options featured on the tool as relatively comprehensive or
based on criteria such as price, terms, quality of service, or
security, when in fact the operator determines which options to include
based on financial or other benefits obtained by the operator. For
example, a set of lenders jointly establish a comparison-shopping tool
that appears to present options based on criteria that further the
consumer's interests but that actually presents only a subset of
products that are offered or provided by those lenders. Some sites
preference certain products while also including other products, but
with design features that ensure that only the preferred products
receive preferred placement, regardless of whether that is in the
interests of the consumer.
<bullet> A tool operator presents a preferred product as a
``match'' that is not the participating product that is most consistent
with the expressed interests of a consumer. A comparison tool can
prompt users to input information about their preferences through a
survey, filtering options, or interactions with a chatbot. By eliciting
input on consumer preferences, the operator creates the impression that
results will be presented based on an objective evaluation of those
preferences. However, the operator actually presents results based on
financial or other benefits to the operator.
<bullet> A lead generator guarantees a certain number and quality
of leads to multiple participating lenders and divides customers
meeting those criteria up without regard to the fact that consumers
with similar characteristics are receiving different offers.
About Consumer Financial Protection Circulars
Consumer Financial Protection Circulars are issued to all parties
with authority to enforce Federal consumer financial law. The CFPB is
the principal Federal regulator responsible for administering Federal
consumer financial law, see 12 U.S.C. 5511, including the Consumer
Financial Protection Act's prohibition on unfair, deceptive, and
abusive acts or practices, 12 U.S.C. 5536(a)(1)(B), and 18 other
``enumerated consumer laws,'' 12 U.S.C. 5481(12). However, these laws
are also enforced by State attorneys general and State regulators, 12
U.S.C. 5552, and prudential regulators including the Federal Deposit
Insurance Corporation, the Office of the Comptroller of the
[[Page 17710]]
Currency, the Board of Governors of the Federal Reserve System, and the
National Credit Union Administration. See, e.g., 12 U.S.C. 5516(d),
5581(c)(2) (exclusive enforcement authority for banks and credit unions
with $10 billion or less in assets). Some Federal consumer financial
laws are also enforceable by other Federal agencies, including the
Department of Justice and the Federal Trade Commission, the Farm Credit
Administration, the Department of Transportation, and the Department of
Agriculture. In addition, some of these laws provide for private
enforcement.
Consumer Financial Protection Circulars are intended to promote
consistency in approach across the various enforcement agencies and
parties, pursuant to the CFPB's statutory objective to ensure Federal
consumer financial law is enforced consistently. 12 U.S.C. 5511(b)(4).
Consumer Financial Protection Circulars are also intended to
provide transparency to partner agencies regarding the CFPB's intended
approach when cooperating in enforcement actions. See, e.g., 12 U.S.C.
5552(b) (consultation with CFPB by State attorneys general and
regulators); 12 U.S.C. 5562(a) (joint investigatory work between CFPB
and other agencies).
Consumer Financial Protection Circulars are general statements of
policy under the Administrative Procedure Act. 5 U.S.C. 553(b). They
provide background information about applicable law, articulate
considerations relevant to the Bureau's exercise of its authorities,
and, in the interest of maintaining consistency, advise other parties
with authority to enforce Federal consumer financial law. They do not
restrict the Bureau's exercise of its authorities, impose any legal
requirements on external parties, or create or confer any rights on
external parties that could be enforceable in any administrative or
civil proceeding. The CFPB Director is instructing CFPB staff as
described herein, and the CFPB will then make final decisions on
individual matters based on an assessment of the factual record,
applicable law, and factors relevant to prosecutorial discretion.
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2024-05141 Filed 3-11-24; 8:45 am]
BILLING CODE 4810-AM-P
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</html>Indexed from Federal Register on March 12, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.