A recent article in the New York Times profiled Josh Reich, a software engineer and founder of Simple, a new online banking start-up. The company has joined the growing ranks of start-ups disrupting business as usual in the banking and health care industries.
“Banks make money by keeping customers confused,” Mr. Reich said. In response, Simple and others are hoping to attract customers with… clarity. Simple lets customers search their accounts with plain English commands like “Show me how much I spent on dinner last month in Portland,” or “Show me how much money I spent on gifts in December.” Customers can see transactions plotted on a map or search for all transactions in a particular state or country, something that would be difficult with a traditional bank. (more…)
For the past year, the Consumer Financial Protection Bureau, working with Kleimann Communications Group, has run extensive usability testing with consumers throughout the U.S. on the proposed new mortgage disclosure form. This form combines the original Truth in Lending disclosure and the Good Faith Estimate into a single three-page disclosure. Because purchasing a home is likely to be the most expensive and daunting purchase most of us will ever make, it’s critical that we receive clear, usable information that will allow us to compare rates from one lender to another and know exactly the fees we are paying. This new form will help us do that. (more…)
Joe Kimble, professor of law at Thomas M. Cooley Law School, has just finished his long awaited new book, Writing for Dollars, Writing to Please: The Case for Plain Language in Business, Government, and Law. Carolina Academic Press, which also published his earlier book Lifting the Fog of Legalese, is the publisher.
The book sets out the elements of plain language, debunks the 10 biggest myths about it, summarizes 40 historical highlights, and summarizes 50 (no less) studies on the benefits of plain language for everyone–readers, writers, businesses, and government agencies.
If you think America is shifting to a culture of transparency, unfortunately, you’re wrong: consumers are drowning in more fine print and byzantine disclosure language than ever before. Bank contracts and product manuals commonly bloat to hundreds of pages, in type as small as 1/6 of an inch.
Who reads this stuff? Almost nobody. And as this news clip from a CBS affiliate in Alabama reveals, that costs the average household about $3,000 a year.
Lawyers argue that excessive language is necessary to “protect consumers.” But until disclosures are presented in a form people actually read, they’re doing just the opposite: allowing organizations to bury unattractive terms in pages of jargon, while simultaneously shielding them from legal liability.
“Devil in the Details” by Shanisty Myers
If you’ve ever bought a house, you probably remember the pages and pages of documents you signed. You probably wished they could be clearer and make more sense.
The Consumer Financial Protection Bureau (CFPB) thinks these forms can be clearer, too. They’ve been working on a new standard for mortgage disclosures — those forms that summarize the costs of a home loan.
The CFPB project, Know Before You Owe, has collected input from thousands of people in both in-person usability testing and through online comments collected on their web site.
In a story on CBS News, we found a photo of President Obama holding a version of the proposed form. Here’s what CBS News reported about the President’s comments:
“The president recalled his and First Lady Michelle Obama’s experience buying their first home together – a process he described, humorously, as so complicated that the two of them would end up looking through the forms and asking “what does this phrase mean?”
“And that’s, you know, for two trained lawyers,” he laughed.
He held up a one-page mock-up of what he wants such forms to look like in the future, and pointed to the Consumer Finance Protection Bureau (CFPB) as a means to achieving that end. …
The goal, he said, was to make things “simple, not complicated,” to protect consumers from getting “cheated.”
“Terms are clear. Fees are transparent,” he said.”
That’s plain language at work!
Obama unveils mortgage refinancing plan by Lucy Madison, CBS News Political Hotsheet, February 1, 2012
To all those who still think plain language = low-literacy: have you taken a look at your mobile phone contract lately? Or your cable agreement? Chances are, you’re paying more than you think.
This month’s SmartMoney Magazine catalogs a horrifying array of contracts, product waivers and legal disclosures with language that has likely bamboozled each and every one of us at some point.
From 100+ page checking account contracts to unexpected fees in everything from airline tickets to gift cards, this lack of clarity is costing us, big time. Experts estimate that hidden disclosures cost each American household more than $2,000 a year.
Fed up yet?
The Consumer Financial Protection Bureau (CFPB) wants public input about your experience with private student loans, by January 17, 2012. (more…)
The Consumer Financial Protection Bureau (CFPB) has now added credit card agreements to its list of consumer-centered communication. The Bureau is asking for public comments about their prototype at www.consumerfinance.gov/credit-cards/knowbeforeyouowe/
Here’s an explanation of their new focus from Marla Blow, Acting Assistant Director, Card Markets, CFPB. (more…)
An article this week on www.creditcards.com outlines steps some credit card companies are taking to simplify credit card agreements, in advance of anticipated guidance from the new Consumer Financial Protection Bureau.
Research on credit card use shows that even sophisticated users have trouble understanding complex payment algorithms and risks. Obviously, consumers are at a further disadvantage when they can’t decipher benefit term agreements that may not be in their best interests. (more…)
Although the Center does not endorse readability testing as the best or the only or the most effective method for determining how easily someone can understand and use information, CreditCards.com conducted an analysis of the readability of most of the major credit card statements/agreements. CreditCards.com’s mission is to “provide consumers with the largest variety of credit card offers online, and to enable smart selection and use of cards by offering news, advice, features and tools.” (more…)