“The design is nice -- it’s easy to read. It’s set up nicely, just the whole italic and the bold heading and the lines and so on -- it’s just easy to read. It’s not confusing. You know you don’t have to plow through it.”

“[It’s] good if you were going to compare them. I mean, you can just put this one next to this one, and go: yes, yes, no, no. It’s very symmetrical.”

Effective Disclosure Regimes:

Practical Approaches

Jeanne M. HogarthConsumer & Community Affairs

Federal Reserve Board, USAThe analysis, comments and conclusions set forth

in this presentation represent the work of the authors and do not indicate concurrence of the

Federal Reserve Board, the Federal Reserve Banks, or their staff.

Goals

Discuss: What makes a disclosure effective?

Goals Share: Design project on notices

that are easy understand and compare

Not a strong record of success

Alcohol and tobacco warnings

Not a strong record of success

Consumer product warnings

Not a strong record of success

Too many products

What makes a disclosure effective?

Consumers are exposed to it

What makes a disclosure effective?

Consumers are aware of it (pay attention to it)

What makes a disclosure effective?

Consumers can comprehend it (understand it)

What makes a disclosure effective?

Consumers can remember it when they need it

What makes a disclosure effective?

Consumers can use it (act on it) when making a decision

Some dilemmas

Exposure & attention

Consumers pay attention to noveltyNew! Improved! Different!

Some dilemmas

Learning effects:

consumers are better at comparing when information is standardized

More dilemmasEfficacy of “encouraging” or “fearful”

messages depend on what behavioral stage a consumer is in

More dilemmasEfficacy of “encouraging” or “fearful” messages

depend on what behavioral stage a consumer is in

More dilemmasHow do we know who is where and

what information they need?

Plain language is necessary..

.. But not sufficient

More than just “plain language”

How do you frame the disclosure – what’s the context?

More than just “plain language”

Is the whole equal to the sum of the parts? How do you organize the parts

More than just “plain language”

How do consumers process information?

WIFFM (what’s in it for me?)

APR?Fees?

Monthly payment?

Interagency project – designing easy-to-

understand consumer financial privacy notices

Design notices that are easier for consumers to understand and compare

Our Targets

Comprehension Compliance Neutrality Comparison

Knowledge

Observation and recall of data

Comprehension

Understanding of information

Application

Applying knowledge to a new situation

Analysis

Separates information into part for better understanding

Synthesis

Builds a pattern from diverse elements

Evaluation

Judges the value of informationBloom’s

Taxonomy

Research Questions

Overa

ll R

esearc

h Q

uesti

on

s:

1.

How

well d

o p

art

icip

an

ts u

nd

ers

tan

d t

he fi

nan

cia

l p

rivacy

noti

ce?

2.

Wh

at

ch

an

ges a

re r

eq

uir

ed

to m

ake t

he fi

nan

cia

l p

rivacy

noti

ce m

ore

usab

le?

Research QuestionIs the information provided in this notice clear and conspicuous?

Research QuestionDo participants understand the bigger picture?

Research QuestionDo participants see and understand the differences in sharing practices?

Research Issue #2

Comprehension

Research Issue #1

Context

Research Issue #3

Comparison

Context PurposeContent Differences

Design processPlan

Design

Assess/Revise Test

Evaluate

Consumer testing

Focus groups

Formative testing

Sets of individual interviews

What we learned

Context is key to comprehension

Design elements aid comprehension

Content revisions improved comprehension

Consumers were able to compare

Where do we go from here?

Usability testing with larger sample

Final report by end of 2006

Coming Attraction!

Truth in Lending – Regulation Z Open-end credit (credit cards)