Can digital comparison-shopping operators or lead generators violate the Consumer Financial Protection Act (CFPA) by preferencing products or services based on financial benefit? According to today’s guidance issued by the Consumer Financial Protection Bureau (CFPB or Bureau), the answer to that question is yes. Specifically, according to the CFPB, operators of digital comparison-shopping tools can violate the CFPA’s prohibition on abusive acts or practices by steering consumers to certain products or services based on remuneration. Lead generators can also violate the CFPA if they steer consumers to one financial services provider over another based on compensation received. As is typical for the CFPB today, the Bureau has couched this guidance on its “abusive” authority under Dodd-Frank.

Reasonable Reliance by the Consumer

According to the CFPB, the nature of a digital comparison-shopping tool’s function in a market, such as when a tool operator helps consumers select products or services based on the consumer’s interests, may be enough to invoke reasonable reliance on the part of the consumer that the tool is acting in the consumer’s best interest. Also, according to the circular, 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 that representation. This can happen even when an operator 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.” Likewise, an operator’s association with a trusted institution could factor into consumers’ reasonable reliance.

For lead generators, when they 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, without disclosing they are receiving a financial benefit, consumers would likely be reasonable in relying on the entity to act in their best interests, in the CFPB’s opinion.

Taking Unreasonable Advantage

According to the Bureau, if a tool operator or lead generator receives a higher fee from one provider than another and provides preferential treatment as a result, this suggests that the lead generator or operator is not making decisions in the consumers’ best interests. However, the CFPB concedes, this concern may be mitigated if a tool operator or lead generator receives compensation from providers but does not consider that in its placement or lead decisions.

The CFPB also noted that advantage-taking can 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. This can also occur where an operator leverages an affiliation or connection with a trusted institution to increase the operator’s revenue while making recommendations not based on factors likely to be consistent with consumer interests.

Our Take

Comparison shopping tools for credit products frequently receive compensation from creditors, and it is common for the placement of credit or other offers on those comparison sites to be influenced by compensation from the product providers — very much like many sites featuring non-financial goods and services. Under settled guidance from the FTC, comparison-shopping sites refrain from making misrepresentations about their recommendations and disclose any financial relationship they have with the product providers that influences the display of products. Under both the FTC’s revised Endorsement Guides from 2023 and its enforcement activity in this area, the statements and disclosures on the comparison shopping site are the most critical element to determining whether the site is committing a violation of law. The CFPB’s circular completely ignores the content of disclosures to consumers (and the guidance from the FTC), and instead focuses only on whether there is compensation paid to the operator of the comparison-shopping site. By failing to address this issue, the CFPB has, possibly intentionally, injected uncertainty into this important issue for e-commerce.