Consumer Financial Protection Bureau (CFPB) Director Richard Cordray is encouraging the CEO’s of banks, credit unions, and financial companies to help consumers exert greater control over their credit cards, debit cards, and other payment methods.
“Today I am writing to you again to urge upon you an issue for your consideration, which we believe is especially timely and important for American consumers,” Cordray wrote in a letter to CEOs. “There is enormous value in new technology that makes it feasible, right now, to enable consumers to exert much greater control over their credit cards, debit cards, and other payment methods. Digital servicing platforms offer the potential for enhanced security and the peace of mind that are made possible by establishing controls that will make it more difficult for unauthorized transactions to occur. Moreover, such platforms can allow consumers to exert greater control on their own spending and those they authorize to use their accounts by establishing settings that limit how, where, when, and to what extent their accounts are accessed—and to do so much more easily and conveniently.”
Cordray stated that customers will want this capability, so companies should figure out how to make it available to them.
As an example, many institutions have developed on/off features on their mobile apps that allow consumers to instantly turn off a payment card that is linked to the app.
“But we believe much greater capability can be made available to your customers through digital servicing, which can enable consumers to exercise very detailed control over their accounts,” Cordray wrote. “For example, with digital servicing, financial institutions may be able to offer consumers the ability to set spending limits on a card-by-card basis for particular merchants, channels of transactions (online versus phone versus in-person versus recurring transactions, for example), or categories of spending.”
Digital servicing will alert customers if a transaction is attempted that falls outside the consumer’s parameters for authorized use, he said. Financial institutions could embed these kinds of money management tools within their online platforms.
“On the eve of my leaving the Bureau, I urge you to think creatively about how you can put more control directly in the hands of your customers,” Cordray added. “This will help them as they worry about data breaches, and could help you minimize the incidents of fraudulent use of credit cards and debit cards and other payment methods. This will help people also to assert greater control of their financial lives. In short, you have the power, right now, to help consumers help themselves in ways that will materially improve their lives and that could reduce your costs. And if you manage to do so, we believe you will enhance the loyalty and engagement of your customers with positive results.”
Those that don’t move quickly in this direction may risk losing business to those who do, he concluded.