Study Enhanced Credit Card Disclosures Not Likely to Discourage Overspending by Consumers

Study Enhanced Credit Card Disclosures Not Likely to Discourage Overspending by Consumers

Contact: John Hartgen
             [email protected]


July 5, 2007, Alexandria, Va. — A recent empirical study, funded in part by the American Bankruptcy Institute Endowment, reveals that the enhanced credit card disclosure rules required by the 2005 bankruptcy law may not be enough to curb consumers’ overuse of credit cards. The researchers, Richard L. Wiener, Jason A. Cantone, Michael Holtje, Ryan J. Winter, Susan Block-Lieb and Karen Gross, conducted their study through an online experiment to examine the effects of enhanced disclosure required by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) on the credit card purchasing behavior among a group of consumers who had filed for bankruptcy and another group that had not. The results of the study are summarized in their article titled “Psychology and BAPCPA: Does Disclosure Affect consumer Behavior? A Summary of an Empirical Investigation,” to be published in the upcoming July/August 2007 issue of theAmerican Bankruptcy Institute Journal.

The study challenges the underlying assumption of the new bankruptcy law and other proposals presume that consumers who possess more complete credit card information, such as information on teaser interest rates and minimum payment obligations, will act rationally to avoid overspending. BAPCPA amended the Truth in Lending Act to craft disclosure rules for credit card companies to help curb overspending by consumers. The study looked to test this rational choice model by examining the role that emotion plays in consumer spending. “[S]imply enhancing the amount of information in credit card disclosures is not sufficient to remedy a consumer’s overuse of credit cards,” concludes the article.

Specifically, the study found that consumers who “shop to end bad moods” actually used their credit cards more and spent more despite their exposure to enhanced credit card disclosure information. The researchers said that their study of random debtors from Nebraska and New York City suggests that relying on disclosure to regulate consumer spending should consider the effects of “mood repair shopping” as a natural outcome of enhanced disclosure. The study also recommended that further research should be conducted to explore how consumers make decisions to pay for purchases and borrow when using their credit cards, as well as to research the effectiveness of credit counseling and debtor education on consumer use of credit. 

The study was also funded by the Ford Foundation and the Coalition for Debtor Education. To obtain a copy of “Psychology and BAPCPA: Does Disclosure Affect Consumer Behavior? A Summary of an Empirical Investigation,” please contact John Hartgen at 703-739-0800 or via email at [email protected].


ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 11,500 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit For additional conference information, visit