CFPB Releases First-Ever Project Catalyst Innovation Highlights Report
On October 20, the CFPB released a new report titled “Project Catalyst report: Promoting consumer-friendly innovation-Innovation Insights.” The report provides an overview of Project Catalyst’s work to promote “consumer-friendly innovation and entrepreneurship,” and outlines the importance of ensuring that consumer protections are built into emerging products and services from the outset. The CFPB released the report in conjunction with remarks given by Director Cordray at Money 20/20, an industry conference focused on payments and financial services innovation.
The report emphasizes the CFPB’s “very sensitive” approach to new technologies, such as its “active role in the push for faster payments systems,” as well as its more general efforts “to identify innovative trends in the marketplace to inform our work.” Throughout the report, the CFPB highlights its efforts to establish “effective communication channels” with “innovators,” including the agency’s pilot program with a credit card company to evaluate the effectiveness of certain practices to encourage prepaid card users to develop regular saving behavior. In its last section, the report discusses various “marketplace developments that may hold the potential for consumer benefits.”
The report similarly summarizes ongoing efforts to coordinate with state, federal, and international regulators, cautioning that the agency “will take action as necessary to protect consumers from innovations that may be unfair, deceptive, abusive, or discriminatory.” In addressing industry members, both the report and Director Cordray at Money 20/20 discuss the CFPB’s authority to provide greater latitude for companies to test alternatives to standard disclosures over time – using as an example, the CFPB’s trial disclosure waiver policy and its no-action letter policy through which the Bureau “can reduce regulatory uncertainty for consumer-friendly innovations.” The report and Director Cordray call for industry participants to propose alternative means of disclosure to consumers.