Opening Schumer’s Box: The Empirical Foundations of Modern Consumer Finance Disclosure Law

This Article explores the fundamental failure of Congress’ twenty-five-year quest to utilize disclosure as the primary tool to both regulate credit card issuers and educate consumers. From inception until present, reforms to this disclosure regime, even when premised on judgment and decision-making behavioralism, were nomothetic in orientation and ignored clear differences in population behavior and the heterogeniety of consumers. Current law prohibits credit card issuers from acquiring consumer socio-demographic data and prevents issuers and regulators from using market and policy experimentation to enhance disclosure’s efficacy. To explain why this regime was structured this way and why it must change, this Article contains four key sections: (1) a comprehensive review of the creation of our modern consumer credit card regulatory scheme; (2) a survey of the empirical evidence used to update and expand that disclosure-centered regime over twenty-five years; (3) an account of why the existing scheme’s disclosure function substantially fails, notwithstanding recent reforms; and (4) an argument that to achieve optimal credit card disclosure efficacy, the law must permit issuers to acquire and utilize customer socio-demographic information, including race, gender, and other characteristics.