CFPB circular focuses on potential for CFPA violation by digital comparison-shopping tool operators

Digital comparison-shopping tool operators that give preference to financial products based on benefits to themselves are in violation of the Consumer Financial Protection Act (CFPA), the federal consumer financial protection agency said Thursday.

The Consumer Financial Protection Bureau (CFPB) issued a circular – Consumer Financial Protection Circular 2024-1 – that says preferencing or steering practices by digital intermediaries for consumer financial products or services violate the CFPA.

“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,” the bureau wrote in Circular 2024-1. “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.”

The circular states that 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.”

The bureau said the CFPA “prohibits covered persons or service providers from engaging in any unfair, deceptive, or abusive act or practice. 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.’”

Release: CFPB Issues Guidance to Rein in Rigged Comparison-Shopping Results for Credit Cards and Other Financial Products

Consumer Financial Protection Circular 2024-01