“Companies need to explain better so we don’t get caught by financial jargon”

Business accounts, car insurance… It’s so easy for the average consumer to misunderstand what might seem obvious to big business, says consumer ninja Wendy Knowler.

Bruce Whitfield chats with consumer journalist Wendy Knowler about the ways big companies seem to overestimate the average consumer’s financial literacy.

– Interest on outstanding bills, loan defaults… We often don’t understand the jargon of the contracts we enter into and get stuck with it.

– Big corporations should explain better, even if it means pointing out what consumer journalist Wendy Knowler seems to be proposing.


© vadymvdrobot/123rf.com
© vadymvdrobot/123rf.com

On The Money Show this week, consumer ninja Wendy Knowler focuses on the way big corporations view the average consumer’s financial literacy, which generally means overestimating our understanding.

Regarding the many calls for help she’s received lately, Knowler said two stand out because they could reflect the experiences of many more consumers.

“I almost didn’t pick them up because the problem seemed so obvious to me…then I thought they couldn’t be the only ones who had that misconception.”

Lina, Knowler’s first case study, switched her auto insurance to Discovery Insure three months ago.

When she decided to trade in her Merc for a new one, Lina believed the insurer was wrongly failing to process her loan defaults.

In Lina’s mind, there was “shortfall” insurance and then “credit shortfall” and because Discovery called it credit shortfall you thought it meant that if she decided to trade in her car and there was a gap between what she got for the car and what she still owed the bank, that would be covered.

Wendy Knowler, consumer journalist

The information about Lina’s default coverage originally provided by Discovery included an option to click on a web link that she missed. So while the emails to them mention “credit gap,” they don’t explain what it is.

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It’s this kind of assumption that we know what everything means that surprises consumers, says Knowler.

There’s room for a little improvement here… All the important bits that people might misinterpret shouldn’t require clicking a web link to get started.

Wendy Knowler, consumer journalist

It’s not fair to customers to expect them to adapt at this rate when it comes to complex and often intimidating things to deal with.

Bruce Whitfield, host of the Money Show

Knowler’s second case study involves an Edgars customer who did not understand why her outstanding balance was increasing each month despite her regular but fluctuating payments.

“She had no idea her payments weren’t covering her premiums, let alone the interest accruing, so her outstanding balance was growing every month.”

Knowler suggested RCS, which processes loan requests for Edgars, add a line to bank statements explaining that you cannot reduce your outstanding balance by paying at least RX per month.

She received an affirmative response: “I think your suggestion to change the statement is a good idea that we will definitely consider.”

Small consumer-focused tweaks like this would make a big difference, she notes.

Can we explain this more simply? How could that be misunderstood? It is better to risk patronizing people than letting them sit with misunderstandings.

Wendy Knowler, consumer journalist

For more details, scroll up to listen to the interview


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