The federal government is proposing a new policy that would allow consumers to publicly post their complaints about consumer financial products and services.
Under the proposal by the Consumer Financial Protection Bureau (CFPB), consumers would have the option to share their account of what happened in the CFPB’s public Consumer Complaint Database.
CFPB has opened a 30-day period for comments on the proposal.
The CFPB says that publishing consumer stories of what happened in their dealings with a financial services firm or product would provide important context to the complaint, help the public to detect specific trends, aid consumer decision-making, and drive improved consumer service.
“The consumer experience shared in the narrative is the heart and soul of the complaint,” said CFPB Director Richard Cordray. “By publicly voicing their complaint, consumers can stand up for themselves and others who have experienced the same problem. There is power in their stories, and that power can be put in service to strengthen the foundation for consumers, responsible providers, and our economy as a whole.”
The financial services industry doesn’t quite see it that way. The Financial Services Roundtable, the American Bankers Association, the Consumer Bankers Association, The Clearing House and the U. S. Chamber of Commerce say the proposal “raises many serious legal and practical issues.”
In a joint letter on the CFPB proposal, the groups also said that 30 days is not enough time for them to respond to the proposal. They requested that the CFPB extend the comment period to not less than 90 days.
The CFPB told Insurance Journal it has received and is reviewing the request for an extended comment period.
For the period July 21, 2011 to June 30, 2014, the CFPB reports that it received close to 400,000 complaints about financial services. By far the most (34%) were about mortgages.
State insurance regulators, not the CFPB, handle consumer complaints on insurance.
According to CFPB, this is the breakdown of the types of complaints it received:
- 34% Mortgages
- 20% Debt collection
- 14% Credit cards
- 12% Credit reporting
- 12% Bank accounts and service
- 3% Consumer loans
- 3% Student loans
- 1% Payday loans
- 0.5% Money transfer
- 0.5% Other
Approximately 56 percent of all consumer complaints were submitted through the CFPB’s website and 10 percent via telephone calls, 24 percent through referrals and the rest were submitted by mail, email, and fax.
Companies have responded to approximately 96 percent of complaints sent to them and report having closed 92 percent of the complaints sent to them.
Now when consumers submit a complaint to the bureau, they fill in information such as who they are, who the complaint is against, and when it occurred. They are also given a text box to describe what happened and can attach documents to the complaint. This information is not posted for the public to view at this time.
The CFPB forwards the complaint to the company, allows the company 15 days to respond, gives the consumer a tracking number, and keeps the consumer updated on its status. After the 15 day period, the CFPB’s Consumer Complaint Database publishes anonymous, individual information about the complaints received, including the date of submission, the consumer’s zip code, the relevant company, the product type, the issue the consumer is complaining about, and the company’s response.
What CFPB is now proposing is to expand the database to include the consumer’s narrative description of what happened, a first-hand account of the consumer’s experience and the problem they would like resolved.
Privacy and Reputation
This is not the first time the proposal has surfaced. In March 2013, the CFPB held off on approving the posting of narratives to consider the privacy concerns raised by the industry.
The CFPB acknowledges the risk that the narratives may contain factually incorrect information as a result of, for example, a complainant’s misunderstanding or misrecollection of what happened. When this happens both consumers and the financial institutions “would be disserved” and the financial firms could suffer reputational damage, according to the CFPB.
But CFPB said it has concluded that while there is always a risk that market participants will draw erroneous conclusions from available data, “the marketplace of ideas would be able to determine what the data shows” with respect to complaint narratives.
The CFPB said that to mitigate this risk, the proposed policy provides for the public release of the company’s response, side-by-side and scrubbed of any personal information, to the consumer’s complaint.
“This process will assure that, to the extent there are factual disputes, both sides of the dispute can be made public,” the CFPB states.
CPBN says it employs a “robust personal information scrubbing standard and methodology” and “de-identification” process to each complaint to protect the identities of the individual consumers.