BCFP Proposal Would Expand “Sandbox” for Testing Innovative Disclosure Methods

The Bureau of Consumer Financial Protection is seeking comments on proposed changes to its Trial Disclosure Program which provides a safe harbor for companies that want to test innovative new methods for making required consumer disclosures. The program was initiated in 2013 but in the past five years only a handful of applications were made and no trial disclosures were approved.

The Bureau hopes to bring new life to the Trial Disclosure Program by streamlining the application process, providing clearer guidance on testing time frames, allowing for the extension of trial programs that prove successful and by coordinating the program with other regulators. Applicants must describe their new disclosure or delivery method and explain how it improves consumer understanding or cost-effectiveness. If approved, the applicant is granted a safe harbor and will be deemed in compliance with existing disclosure requirements.

Proposed changes to the Trial Disclosure Program include:

• Streamlined application process removing redundant and unnecessary elements
• Commitment to grant or deny an application within 60 days
• Two year testing period for most applications, with ability to extend if tested innovation proves beneficial
• Application approval based on impact to both consumer understanding and cost-effectiveness
• Acceptance of applications from groups of companies, thus allowing trade associations to seek approval of trial programs on behalf of members
• Coordination with other federal and state regulators who offer similar regulatory sandboxes
• Protection of confidential information related to Trial Disclosure Programs under the Bureau’s existing confidentiality rules.

The proposal also states the Bureau’s position that a safe harbor granted under the Trial Disclosure Program would protect the recipient from related enforcement actions by other federal and state regulators and serve as a bar to private litigation.

If you want to make sure the revised Trial Disclosure Program meets your specific needs, you may submit comments to the Bureau. Deadline for submission is October 10, 2018.