The CFPB has issued its third Financial Literacy Annual Report to Congress. The report covers the CFPB’s activities to improve consumer financial literacy during the period from June 2014 through September 2015. The report’s Appendix contains a list of the CFPB’s currently available financial education resources, which includes web-based tools, CFPB brochures and other publications, and CFPB research reports.
The report discusses the CFPB’s initiatives as they relate to the two key components of the CFPB’s financial literacy strategy: financial education (which includes “building channels with those who can help reach the public”) and research to identify and build effective financial literacy practices. (The CFPB’s prior annual report identified outreach as a third key component of the CFPB’s strategy. In the new report, the CFPB states that “[w]hile outreach continues to be key to the Bureau’s work, it has become increasingly intertwined with the education initiatives.”)
While there is much to applaud in the CFPB’s financial literacy initiatives, we continue to be disappointed by the CFPB’s failure to educate consumers about the dispute resolution process. As Alan Kaplinsky, Practice Leader of Ballard Spahr’s Consumer Financial Services Group, commented when he presented the industry’s perspective at the CFPB’s March 2015 field hearing on arbitration, the CFPB could play a constructive role by providing consumers with neutral information about how the court system and arbitration works. That information should also include a balanced presentation of both the benefits and drawbacks of class actions. In addition, rather than limiting the use of arbitration, consumer education would be the more appropriate remedy for the CFPB’s statistics that purport to show many consumers are unaware that their disputes became subject to arbitration when they obtained a financial product. More specifically, the CFPB could better educate consumers that they enter into contractual obligations when they obtain credit cards, loans and other consumer financial products and therefore need to carefully review the documents they sign or whose terms they otherwise agree to.