Chapter 10 Introduction

Consumer spending is responsible for more than two-thirds of U.S. economic output. 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. According to the AARP Longevity Economy Report, older adults contribute $8.3 trillion to the U.S. economy every year. That represents 40 percent of the total value of goods and services provided in the U.S. during the year, also known as gross domestic product or GDP.

Ensuring consumer protections is essential in an economy so reliant on consumer spending. Financial services in particular can either help or harm consumers, depending on how products and services are structured. Unfair, deceptive, or abusive financial products and services can be especially harmful to older adults. They have less time to make up for the losses in income, savings, and retirement accounts that can result. The costs, terms, and conditions of financial services can therefore have an especially large impact on them.

Taking on debt The amount of money owed by the government, which is the accumulation of all prior annual deficits. is one way they make up for income shortfalls. Over the past 30 years, the amount of debt The amount of money owed by the government, which is the accumulation of all prior annual deficits. older people carry has increased sharply. This is a threat to their long-term financial security, as increasing debt The amount of money owed by the government, which is the accumulation of all prior annual deficits. repayments burden the budgets of retirees. According to the Federal Reserve Survey of Consumer Finances, 72 percent of families age 50 and older carried debt The amount of money owed by the government, which is the accumulation of all prior annual deficits. in 2019, up from 57 percent in 1989. The real average debt The amount of money owed by the government, which is the accumulation of all prior annual deficits. carried by Americans age 50 and older increased from $32,675 in 1989 (in 2019 inflation-adjusted dollars) to $93,587 in 2019.

The Consumer Financial Protection Bureau An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. (CFPB An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. ) is responsible for protecting consumers in 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 An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. promulgated regulations in many areas, including mortgage lending, loan disclosures, appraisals, debt The amount of money owed by the government, which is the accumulation of all prior annual deficits. collection, prepaid cards, and student loan servicing. As of March 2020, it had collected more than 2 million complaints through its consumer complaint system and sought responses from the companies involved. The CFPB An independent federal regulatory agency within the Federal Reserve System that is responsible for ensuring consumer protection in the financial marketplace by administering federal financial consumer protection laws. has collected over $12.4 billion in fines through enforcement actions, and more than 31 million consumers have received relief.

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.