CFPB Publishes Research Finding Higher Price Complexity Leads Consumers to Pay More

Summary:

The Consumer Financial Protection Bureau (CFPB) has released a report highlighting the impact of complex pricing structures on consumer spending. Researchers conducted experiments involving buyers and sellers, finding that participants paid more when prices were broken into sub-parts and were harder to understand. The study suggests that consumers tend to favor more complex products with higher prices, making it difficult for them to compare prices across different sellers.

Key findings include:

Higher total prices: Sellers' total asking prices increased by 60% when using 16 sub-prices, compared to a single price.
Difficulty in comparing prices: Buyers were 15 times more likely to select a higher-priced option in markets with 16 sub-prices.
* Consumers paid more overall: Transaction prices increased by 70% in markets with 16 sub-prices.

The report highlights the challenges consumers face when dealing with complex pricing, particularly in financial products such as credit cards, checking and savings accounts, mortgages, and auto loans. The CFPB encourages consumers to submit complaints about financial products or services and provides a whistleblower email address (whistleblower@cfpb.gov) for employees who believe their company has violated federal consumer financial laws.