The Consumer Financial Protection Bureau (CFPB) has adopted new policy guidance to protect consumers from deceptive practices in the financial products sector. As is the case for consumers in all markets, many searching for financial products ranging from mortgages to credit cards use the internet to begin their search. Similar to most companies wishing to tout their product line, companies offering financial products often have consumer reviews publicly available online. However, some have resorted to deceptive or fraudulent practices in an attempt to garner more positive product reviews and spin negative reviews away from consumers.
This policy comes on the heels of the Federal Trade Commission’s (FTC’s) sending of notices of penalty offenses to over 700 companies last October that threatened to impose civil sanctions of upwards of $43,000 for using fake endorsements or other deceptive tactics to market products. The CFPB’s policy clarifies that companies that engage in certain deceptive or fraudulent activities that interfere with or prevent consumers from writing and reviewing honest reviews will be violating the Consumer Financial Protection Act. Such conduct includes the use of “gag” clauses in consumer contracts that prevent a consumer from writing an honest review, refusal to publish negative reviews, and having reviews written by non-independent, genuine consumers to bolster the positivity of reviews.
The adoption of this new guidance suggests that the CFPB may be moving toward imposing rigid penalties on companies that engage in practices that interfere with a consumer’s right to view and create genuine reviews of financial products, including financial sanctions similar to those the FTC promises to impose on companies that use deceptive tactics and fake product endorsements. It is imperative that companies offering financial products ensure that their consumer review practices are in compliance with the Consumer Financial Protection Act to avoid these possible penalties