It's hard to quantify switching costs. We can tell when they're high, say, if your landlord ties your internet service to your lease (splitting the take with a shitty ISP that overcharges and underdelivers), the switching cost of getting a new ISP is the cost of moving house. We can tell when they're low, too: you can switch from one podcatcher to another just by exporting your list of subscriptions from the old one and importing it into the new one:

pluralistic.net/2024/10/16/kee…

3/

But sometimes, economists can get a rough idea of the dollar value of high switching costs. For example, a group of economists working for the @CFPB calculated that the hassle of changing banks is costing Americans *at least $677m per year* (see page 526):

files.consumerfinance.gov/f/do…

4/

The CFPB economists used a very conservative methodology, so the number is likely higher, but let's stick with that figure for now. The switching costs of changing banks - determining which bank has the best deal for you, then transfering over your account histories, cards, payees, and automated bill payments - are costing everyday Americans more than half a billion dollars, every year.

5/

Now, the CFPB wasn't gathering this data just to make you mad. They wanted to *do something* about all this money - to find a way to lower switching costs, and, in so doing, transfer all that money from bank shareholders and executives to the American public.

6/

And that's just what they did. A newly finalized Personal Financial Data Rights rule will allow you to authorize third parties - other banks, comparison shopping sites, brokers, anyone who offer you a better deal, or help you find one - to request your account data from your bank. Your bank will be *required* to provide that data.

I loved this rule when they first proposed it:

pluralistic.net/2024/06/10/get…

And I like the final rule *even better*.

7/

They've really nailed this one, even down to the fine-grained details where interop wonks like me get very deep into the weeds. For example, a thorny problem with interop rules like this one is "who gets to decide how the interoperability works?" Where will the data-formats come from? How will we know they're fit for purpose?

8/

This is a super-hard problem. If we put the monopolies whose power we're trying to undermine in charge of this, they can easily cheat by delivering data in uselessly obfuscated formats. For example, when I used California's privacy law to force Mailchimp to provide list of all the mailing lists I've been signed up for without my permission.

9/

In response, they sent me thousands of folders containing more than 5,900 spreadsheets listing their internal serial numbers for the lists I'm on, with no way to find out what these lists are called or how to get off of them:

pluralistic.net/2024/07/22/deg…

So if we're not going to let the companies decide on data formats, who should be in charge of this?

10/

One possibility is to require the use of a standard, but again, *which* standard? We can ask a standards body to make a new standard, which they're often very good at, but not when the stakes are high like this. Standards bodies are very weak institutions that large companies are very good at capturing:

pluralistic.net/2023/04/30/wea…

11/

Here's how the CFPB solved this: they listed out the characteristics of a good standards body, listed out the data types that the standard would have to encompass, and then told banks that so long as they used a standard from a good standards body that covered all the data-types, they'd be in the clear.

12/

Once the rule is in effect, you'll be able to go to a comparison shopping site and authorize it to go to your bank for your transaction history, and then tell you which bank - out of all the banks in America - will pay you the most for your deposits and charge you the least for your debts. Then, after you open a new account, you can authorize the new bank to go back to your old bank and get *all* your data: payees, scheduled payments, payment history, all of it.

13/

Switching banks will be as easy as switching mobile phone carriers - just a few clicks and a few minutes' work to get your old number working on a phone with a new provider.

This will save Americans *at least* $677 million, *every year*. Which is to say, it will *cost the banks* at least $670 million every year.

Naturally, America's largest banks are suing to block the rule:

americanbanker.com/news/cfpbs-…

14/

CFPB's open banking rule faces suit from Bank Policy Institute

The Bank Policy Institute is among the parties that filed a lawsuit late Tuesday to challenge the Consumer Financial Protection Bureau's new open banking rule.

^{Kate Berry (American Banker)}

Of course, the banks claim that they're only suing to *protect you*, and the $677m annual transfer from their investors to the public has nothing to do with it. The banks claim to be worried about bank-fraud, which is a real thing that we should be worried about. They say that an interoperability rule could make it easier for scammers to get at your data and even transfer your account to a sleazy fly-by-night operation without your consent. This is also true!

15/

It is *obviously* true that a bad interop rule would be bad. But it doesn't follow that every interop rule is bad, or that it's impossible to make a good one. The CFPB has made a *very* good one.

For starters, you can't just authorize *anyone* to get your data. Eligible third parties have to meet stringent criteria and vetting. These third parties are only allowed to ask for the narrowest slice of your data needed to perform the task you've set for them.

16/

They aren't allowed to use that data for *anything else*, and as soon as they've finished, they must delete your data. You can also revoke their access to your data at any time, for any reason, with one click - none of this "call a customer service rep and wait on hold" nonsense.

What's more, if your bank has *any* doubts about a request for your data, they are empowered to (temporarily) refuse to provide it, until they confirm with you that everything is on the up-and-up.

17/

I wrote about the lawsuit this week for @eff's Deeplinks blog:

eff.org/deeplinks/2024/10/no-m…

In that article, I point out the tedious, obvious ruses of securitywashing and privacywashing, where a company insists that its most abusive, exploitative, invasive conduct can't be challenged because that would expose their customers to security and privacy risks. This is such bullshit.

18/

No Matter What the Bank Says, It's YOUR Money, YOUR Data, and YOUR Choice

The Consumer Finance Protection Bureau (CFPB) has just finalized a rule that makes it easy and safe for you to figure out which bank will give you the best deal and switch to that bank, with just a couple of clicks.

^{Electronic Frontier Foundation}

It's bullshit when printer companies say they can't let you use third party ink - for your own good:

arstechnica.com/gadgets/2024/0…

It's bullshit when car companies say they can't let you use third party mechanics - for your own good:

pluralistic.net/2020/09/03/rip…

It's bullshit when Apple says they can't let you use third party app stores - for your own good:

eff.org/document/letter-bruce-…

19/

HP CEO evokes James Bond-style hack via ink cartridges

"Our long-term objective is to make printing a subscription."

^{Ars Technica}

It's bullshit when Facebook says you can't independently monitor the paid disinformation in your feed - for your own good:

pluralistic.net/2021/08/05/com…

And it's bullshit when the banks say you can't change to a bank that charges you less, and pays you more - for your own good.

20/

CFPB boss Rohit Chopra is part of a cohort of Biden enforcers who've hit upon a devastatingly effective tactic for fighting corporate power: they read the law and found out what they're allowed to do, and then did it:

pluralistic.net/2023/10/23/get…

The CFPB was created in 2010 with the passage of the Consumer Financial Protection Act, which specifically empowers the CFPB to make this kind of data-sharing rule.

21/

Back when the CFPA was in Congress, the banks *howled* about this rule, whining that they were being forced to share their data with their competitors.

But your account data isn't your bank's data. It's *your* data. And the CFPB is gonna let you have it, and they're gonna save you and your fellow Americans at least $677m/year - forever.

22/

I'll be in Tucson, AZ from November 8-10: I'm the Guest of Honor at the TusCon science fiction convention:

tusconscificon.com/

eof/

Sci Fi Conventions | TusCon 51 | Science Fiction | Fantasy & Horror

51st Annual Sci-Fi, Fantasy, and Horror Convention “The Best Little Sci-Fi, Fantasy & Horror Convention in Arizona."

^{Sci Fi Conventions | TusCon 51 | Science Fiction | Fantasy & Horror}