Ed's Blog

In 2015, the Consumer Financial Protection Bureau (CFPB) made two major changes to its successful public consumer complaint database:

  • First, in March 2015 it started collecting optional consumer narratives, or stories, giving viewers -- other firms, consumers, researchers -- a new and robust data field to study complaint patterns.  It began publishing those story narratives last June.
  • Second, in July 2015 the CFPB began publishing a monthly complaint summary, for the first time also naming and ranking firms leading the complaint parade.

We wrote about the importance of those 2015 changes here.

Now, the CFPB has come through with its latest improvement to the database. At the end of July, the CFPB announced it was improving the database again; its latest change will give consumers a chance to “rate the company’s handling of his or her complaint on a one-to-five scale and provide a narrative description in support of the rating.” It explains the history of the idea in this blog entry.

Of course, some opponents of the CFPB and its database will also attack this latest improvement. (Don’t forget, however, that they also routinely attack the CFPB’s independence, its authority to enforce the consumer laws and the very idea of a CFPB.)

Many banks, lenders and even payday lenders, credit bureaus and debt collectors have long pilloried the CFPB’s consumer database (American Banker story). Much of their whining is self-serving. They just don’t like their customers having an effective way to complain. They falsely claim CFPB doesn’t verify complaints. They falsely complain they don’t get a chance to tell their side of the story. Actually, CFPB does verify that complainants have an account relationship. CFPB also gives the firms a chance to respond publicly with their own explanation (but very few do).

They also neglect to recognize that many government agencies – from NHTSA’s safercar.gov to CPSC’s saferproducts.gov are now publicly posting consumer complaints in searchable databases. We’ve explained the importance of these efforts in an appendix that appears in each of our six (and counting) PIRG reports on the CFPB Complaint Database.

But I predict it will be harder for the banks and other financial firms to oppose the latest change. Why? Several of them actually called for it, as CFPB noted last year:

“As part of the public comment process associated with that policy, several trade associations and companies commented that the Consumer Complaint Database should include positive feedback in conjunction with complaint narratives. One commenter suggested that if the Database is to function as a marketplace of ideas, then it should reflect the entire market and not solely consumers submitting complaints. Several trade associations stated that if the database is to be likened to private Web-based review sites, then positive feedback is necessary.”

The bureau has always looked at the database as an opportunity for positive behavior to be reported and to benefit firms seeking to improve their business and market share. The new proposal simply adds more opportunities.

”The consumer will have the ability to rate the company's response to and handling of his or her complaint on a one to five scale and provide a narrative description in support of the rating. Positive feedback about the company's handling of the consumer's complaint would be reflected by both high satisfaction scores and by the narrative in support of the score. Negative feedback about the company's handling of the consumer's complaint would be better supported and more useful to companies than the current “dispute” function.”

Those other trade associations that don’t like the CFPB or the database at all and don’t want the database to be improved will have their say. Some of them watn the database to go away, but if it won’t, they’d like to cripple it, for example, with a wrong-headed proposal from Rep. Matt Salmon (AZ). His bill, HR 5413, would require CFPB not only to limit published complaints to an “aggregated” form but also to first “verify” any complaint that “alleges a violation of a law, regulation, or contractual agreement.” Of course, many illegal practices are only identified after a series of similar complaints uncovers them. As the bureau noted last year:

“Therefore, it is not the existence of a routine complaint, by itself, that draws the attention of the market, but instead it is factors such as the number of complaints relative to comparable companies, how a company handles its complaints, the patterns and categories that identify and show the frequency of certain complaints, and perhaps the occasional notable fact pattern.”

Note that a leading opponent of the CFPB, the U.S. Chamber of Commerce, attempted to both reject and twist this analysis when it claimed in a comment that the above excerpt meant that the public database was essentially unnecessary:

“The policy question has been what incremental value is provided by publishing them through the database. Very little, the Bureau now concedes.”

Actually, U.S. Chamber, the incremental value is “a lot” and the CFPB did not concede your point at all. It recognizes that public disclosure of each incremental complaint helps achieve an important policy goal. Many consumers might not realize that they were treated badly (possibly illegally) until they see someone else’s narrative and say “Hey, that is exactly what happened to me!” and then go on to file their own complaints, giving the CFPB (as well as consumers, researchers and other firms) a broader, more robust and clearer picture of the marketplace.

The CFPB is taking public comments until 30 September 2016 as part of a “Request for Information” about this important database change. You can file your own comment or read already filed comments here (to file look to the green “Submit a Formal Comment” block at top right; to read filed comments, look below it). Note that a “formal comment” can be as short as “Bravo!” (Note that the very first comment is from a coalition of trade associations asking for an extension of the comment period.)

Opponents of the CFPB and consumer protection will continue to attack the CFPB’s efforts to protect consumers. Even supposedly white-shoe bank lobbies, such as the Financial Services Roundtable, have attacked the database and claimed it is like “Yelp” or “Angie’s List”(and therefore somehow bad; alas, following withering criticism, FSR has taken down the  attack website referred to in this Bloomberg story). But not to worry, the CFPB Monitor blog run by the financial industry lawyers Ballard Spahr is still pushing a Yelp narrative: ”With this latest move, the CFPB is increasingly shaping the Portal to resemble a consumer finance “Yelp”-style rating platform.”

So, some of the loudest industry opponents of the CFPB have decided that "Yelp" is a negative comparison which will help feed more opposition to the database. First, we think that social media consumer sentiment rankings are here to stay and businesses need to get used to it. Second, regardless of how you feel about Yelp or other user ranking sites and their business models, the CFPB database is not a user ranking site.

The CFPB database is a tool being used by a government agency to help make financial marketplaces more transparent and make them work better. Every change that the CFPB has made to the database since 2011 has been carefully made to balance consumer privacy and industry criticisms without limiting the tremendous benefits that accrue to society from having an opportunity to see which firms and which practices work well and which might be unfair. Adding a chance for consumers to rank how companies treat their complaints -- well or otherwise -- is absolutely in the public interest.  

The CFPB has now collected nearly one million consumer complaints and posted nearly 600,000 (so far) in the public database. The CFPB uses the information in the database to make better public policy. Researchers can use it to study the financial marketplace, as we do. Companies can use it to gauge, “How are we doing?” Competitors can use it to say, “We better not do that.”

You can file consumer complaints to the CFPB here. Call free (855) 411-2372 with questions. You can check out the complaint database here and create your own visualizations (use tools to compare only some companies/some complaint categories, etc.) to help you decide where to take your own financial business. You can read complaint narratives sent in by other consumers. And soon, you’ll be able to rank your bank or credit bureau’s response to your complaints and read composite rankings. That’s better government that will make markets work better, no matter what opponents of consumer protection claim. Don’t forget to file a public comment here.

The idea of the CFPB needs no defense, only more defenders.

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