Consumer spending is responsible for more than two-thirds of U.S. economic growth. Older adults are responsible for a disproportionate share of consumer spending. They represent a powerful force that is driving economic growth and value. This includes the products and services they purchase directly, as well as the further economic activity this spending generates. In 2015, older adults fostered $7.6 trillion in U.S. economic activity.
Ensuring consumer protections is essential in an economy so reliant on consumer spending, and older adults to help drive that spending. AARP’s Consumer Principles outline the baseline consumer protections needed across all products and services. Emerging products and platforms, and the widespread introduction of artificial intelligence in many industries, have not changed the need for these protections. They are just as relevant today.
Consumers, including older adults, need access to safe goods and services offered with fair and understandable terms and conditions. They need meaningful redress when products or services don’t work or cause harm. And in a world where data play an increasingly important role, they need a right to privacy.
Financial services in particular can either help or harm consumers, depending on how products and services are structured. Older Americans face a variety of financial challenges. And they have less time to make up for the losses in income, savings, and retirement accounts. Thus, it is harder for them to recover from financial setbacks. Financial services costs, terms, and conditions can therefore have an especially large impact on them.
Taking on debt is one way they make up for income shortfalls. Over the past 30 years, the amount of debt older people carry has increased sharply. This is a threat to their long-term financial security as increasing debt repayments burden the budgets of retirees. According to the Federal Reserve Survey of Consumer Finances, 71 percent of families age 50 and older carried debt in 2016, up from 57 percent in 1989. Average debt carried by Americans 50 and older increased from $30,653 in 1989 to $85,072 in 2016.
The Consumer Financial Protection Bureau is responsible for consumer protection in the financial markets. The bureau’s mission is to make sure all consumers have access to consumer financial products and services that are fair, transparent, and competitive. In the first few years after it opened its doors in 2011, the CFPB promulgated regulations in many areas, including mortgage lending, loan disclosures (“Know Before You Owe”), appraisals, debt collection, prepaid cards, and student loan servicing. As of June 2018, it has collected more than 1.5 million complaints through its consumer complaint system and sought responses from the companies involved. Through its enforcement actions, the CFPB has collected over $12.4 billion in fines, and more than 31 million consumers have received relief. Yet recent actions suggest that it may take a less aggressive role in regulation and enforcement in the future. Leadership changes have prompted new priorities moving forward and uncertainty about its future activities.
All consumers need to know they will be protected when they borrow, invest, or do business with a financial services company. Effective consumer protection is critical for the safety and soundness of financial markets as well as the U.S. economy as a whole. Americans of all ages benefit from stable financial and housing markets as they build financial security.