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Consumer Bureau Moves to Spur Consumer-Friendly Innovation

Consumer Bureau Moves to Spur Consumer-Friendly Innovation

Project Catalyst will collaborate with innovators within the consumer financial markets

November 17th, 2012 by James Limbach of ConsumerAffairs in News

Project Catalyst, an initiative designed to encourage consumer-friendly innovation and entrepreneurship in markets for consumer financial products and services, is on the launch pad. The project, a creation of the Consumer Financial Protection Bureau (CFPB) is seen as "an important means of fulfilling its (CFPB's) mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act to give all consumers access to fair, transparent, competitive, and innovative markets.

"We want to collaborate with innovators seeking to advance consumer-friendly innovation," said CFPB Director Richard Cordray. "These collaborations help us better understand what works and does not work to improve life for consumers in the marketplace."

Through Project Catalyst, the CFPB will engage more closely with companies and entrepreneurs who are at the front lines of innovation, according to a press release. The agency says it has already conducted early outreach to the innovation community, and is now establishing a Website dedicated to boosting access and communication between the bureau and those in that community.

The plan

With Project Catalyst, CFPB says it will work to:

Establish firm lines of communication with innovators: The bureau wants to be accessible to all those who may be affected by its regulations, including those on the front lines of innovation. Direct communication will allow the bureau to better understand the current situations in the market.

Understand new and emerging products in the market: Current regulations were written to address existing products. CFPB says as products evolve, regulations may need to evolve as well and it wants to be prepared.

Engage with innovators: The agency says it wants to engage with innovators who have new ideas that beget consumer-friendly innovation. These collaborations, the bureau says, will help it better understand what works and does not work for consumers.

Private sector involvement

In the inaugural phase of Project Catalyst, three companies have agreed to share anonymous data about consumer behaviors and trends with the CFPB. The data sharing, according to the bureau, will not contain personally identifiable information and appropriate precautions will be taken to ensure that individual consumers cannot be identified through the data. The agency will use that data gathered to better inform policy decisions. The three companies are:

BillGuard, a company that alerts consumers to questionable charges on their debit and credit cards and helps them resolve billing disputes quickly. BillGuard will share billing dispute data with the bureau, which will allow it to observe trends in consumer complaints and complaint resolution.

Plastyc, which is designed to be an alternative to traditional banking. Plastyc's data sharing will focus on the value consumers place on easily depositing and obtaining immediate access to their funds.

Simple,  a firm designed to be an alternative to traditional banking. This collaboration will explore how consumers can gain insight into their spending habits and help the CFPB understand what tools can encourage saving.