Financial companies likely will have mixed views about a new proposal from the Consumer Financial Protection Bureau (CFPB) that will allow consumers to share details about their complaints in the bureau’s public-facing Consumer Complaint Database.
While businesses may object to the public nature of the complaints, the bureau also is giving companies the ability to respond with their own details regarding consumers’ complaints.
Among the organizations expressing concern is the National Association of Federal Credit Unions (NAFCU). “Credit unions take great care to address their member’s complaints directly and foster ongoing relationships with their members. NAFCU has serious concerns about the potential for undue reputation risks to financial institutions relative to unsubstantiated claims,” NAFCU Director of Regulatory Affairs Mike Coleman said in a Credit Union Times report. “NAFCU will closely examine the proposal and its impact on credit unions, however, at first blush the risks of unwarranted reputational harm to good actors far outweigh any benefits this proposal would create to assist the CFPB to resolve legitimate complaints.”
The bureau contends publishing consumer narratives would provide important context to the complaints, help the public detect specific trends in the market, aid consumer decision-making, and drive improved consumer service, according to its announcement of the proposed policy. A snapshot of consumer complaints submitted to the bureau through June 30 can be found here.
“The consumer experience shared in the narrative is the heart and soul of the complaint,” Richard Cordray, CFPB director, said in a statement. “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.”
Since Congress formed the bureau three years ago this week in response to the effects the financial crisis was having on consumers, it has handled more than 400,000 consumer complaints, Cordray noted in a separate prepared speech before a July 17 consumer response field hearing in El Paso, Texas.
“Coming out of such a severe financial crisis, we did not know what the volume or intensity of complaints would be,” he said. “One conscious choice we made – perhaps wisely, as it now seems in retrospect – was to build this tool very carefully, adding different products and markets at distinct stages.”
Whereas the CFPB first began taking complaints about credit cards, it has since expanded this tool to include mortgages, bank accounts and services, private student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection, and payday loans.
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. Under the proposed changes, they are also given a text box to describe what happened and can attach documents to the complaint. The bureau will forward the complaint to the company, allow the company to respond, give the consumer a tracking number, and keep the consumer updated on its status.
The Consumer Complaint Database includes basic, anonymous, individual-level 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. Complaints in the data base are grouped into dozens of categories, such as “billing disputes,” “transaction issues,” or “advertising and marketing.”
The bureau contends the additional content from consumers and companies would enhance the bureau’s ability to identify specific trends, such as mystery charges from specific companies; help consumers make more-informed decisions before buying specific products or services; and spur competition based on consumer satisfaction and greater motivation for companies to address their shortcomings.
Included in the proposal are consumer safeguards. For example, consumers must opt in before their complaint would be published, and they also may opt out at any time. Moreover, no personal information would be shared, and companies would be given the opportunity to post a written response that would appear next to the consumer’s story. Complaints are listed in the database only after the company responds to the complaint or after it has had the complaint for 15 days, whichever comes first.