Imagine if all your utility and service providers – from cable and electricity suppliers to credit card and telecom companies – could arbitrarily start sending all your account and billing information electronically rather than through the mail.
Potential action by the Securities and Exchange Commission could set a precedent for companies to do just that.
Despite receiving pushback from hundreds of Americans, the SEC is still considering so-called Rule 30e-3, which would allow mutual funds to send semi-annual fund reports electronically instead of by mail, regardless of consumer preference.
It seems like these days you can’t open an envelope without seeing an invitation to go paperless or opt into e-billing. Still, many Americans have chosen to continue receiving statements and bills in paper form – some for cybersecurity reasons, others because emails are more likely to be missed or accidentally deleted, and millions more who don’t have regular internet access or live with disabilities or language issues that make electronic communication difficult.
Investors already have the option to receive their shareholder reports electronically. Just like cable bills and credit card statements, the option to get paperless mutual fund reports is prominently marketed, both online and in paper form.
In fact, about half of investors have already requested electronic delivery without regulatory intervention, and that number grows every year. Those who have not chosen e-delivery should not be forced into this option.
In allowing funds to change the default delivery method of shareholder reports from paper to electronic, irrespective of consumer preference, the SEC would be setting a damaging precedent that private enterprise would be quick to adopt. Rule 30e-3 would not only codify the ability of the financial services industry to decide how it delivers information to the public, but it would also set the stage for other government agencies to let other industries do the same – without regard for online access issues or consumer needs and desires.
Forcing customers to go electronic can lead to missed statements and missed payments – which can result in lower credit scores and more. Recognizing this slippery slope, the National Consumer Law Center recently highlighted these electronic billing pitfalls and called on the Consumer Financial Protection Bureau to ban private sector efforts to force customers to go paperless.
Consumers should be allowed to choose to receive information electronically on their own time, when – or if – the adoption of e-delivery is appropriate for them.
Even apart from consumer preferences, the reality is that the digital divide is still a serious problem. Studies by the Department of Commerce and Pew Research Center, for example, show that more than 30 percent of all Americans still lack broadband internet, to say nothing of the countless others who lack the technological knowhow to access investment information online. Downloading PDFs and printing them shifts the cost burdens to consumers, and reading PDFs on mobile phones — the only access that many people have to the internet — is difficult.
It’s clear that Rule 30e-3 places a higher priority on efficiency and saving money for the financial industry than it does on consumer rights, investor transparency and disclosure.
Policies making it less likely that consumers have insight into their investments are simply not in the public interest and should be stopped.
Linda Sherry is director of National Priorities for Consumer Action, a national advocacy organization dedicated to empowering underrepresented consumers nationwide to assert their rights in the marketplace and financially prosper.
Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Submission guidelines can be found here.