Payments news: CFPB backs new national financial literacy plan

The Consumer Financial Protection Bureau said Friday that it supports the new National Strategy for Financial Literacy, a federal plan that names digital financial literacy and scam prevention among its four priorities. For people who build or use payment products, the document is a signal about what federal agencies expect consumers to learn, and what they expect providers to help teach.

Key takeaways

• The strategy sets four priority areas for the Financial Literacy and Education Commission: youth financial capability, saving and investing, digital financial literacy, and scams and fraud education.
• It also lists best practices, such as timely education at key decision points and evaluation of program effectiveness.
• The CFPB is a member agency of the Commission and serves as its vice chair through the bureau’s acting director.

The four priorities

The CFPB’s announcement summarizes each priority. Youth financial capability aims to build basic skills from childhood and young adulthood. Saving and investing seeks to raise knowledge of both and includes promoting awareness of new vehicles, with Trump Accounts for children named as an example. Digital financial literacy focuses on knowledge and decision-making that allow the safe and confident use of digital financial products and services. Scams and fraud education aims to help consumers recognize and avoid scams and have tools to limit the effect of losses.

The third and fourth are the ones closest to payments. Digital products, from card wallets to instant transfers, are where consumers now do most of the sending and spending that the strategy is meant to inform, and fraud is among the risks the document singles out.

A strategy that puts digital literacy and scam prevention next to saving and investing treats payment safety as a core money skill, not a technical add-on.

How the education should be delivered

The strategy also identifies what the agencies consider effective delivery. The list includes actionable and timely education at key financial decision points, tailoring to life stages and individual situations, reinforcing concepts over time, experiential and hands-on learning, high-quality instruction and evaluation of program effectiveness. The announcement says the strategy was developed through consultation with agencies represented on the Commission, public input and independent research.

For a payments company, the first best practice is the most relevant. Education that arrives when a person is about to act, such as before a first large transfer or when a new payee is added, is the model the strategy describes, although the announcement does not say whether providers are expected to adopt it.

The CFPB’s own framework

The bureau said it has developed evidence-based resources of its own, including a youth financial education strategy. That framework describes when and how children acquire the knowledge, skills and behaviors tied to adult financial well-being, and rests on three building blocks: executive functioning skills, positive financial habits and financial knowledge with decision-making skills.

Follow-on from July

The bureau used its July appearance before the Commission to describe its financial education work, including a report published in May and a plan to develop scam and fraud material for servicemembers, veterans, older Americans and young adults. The new strategy puts those themes into a document that all member agencies share, which gives the bureau’s separate efforts a common set of headings.

Who sits on the Commission

The Financial Literacy and Education Commission was established by the Fair and Accurate Credit Transactions Act of 2003 to develop a national strategy. It is made up of the heads of 23 federal agencies and the White House Domestic Policy Council, and the Treasury Secretary chairs it. The CFPB’s acting director is vice chairman.

What to watch

The announcement describes goals and principles rather than programs, deadlines or funding. The next signals will be which agencies publish concrete materials under each priority, whether private providers are invited to take part, and how the Commission plans to measure results.