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From Banking and Finance Law Daily, July 16, 2014

CFPB proposes to go public with consumer complaints

By Katalina M. Bianco, J.D.

The Consumer Financial Protection Bureau is proposing a new policy that would allow consumers to publicly voice their complaints about consumer financial products and services. Consumers submitting a complaint to the CFPB would have the option to share their experiences via the CFPB’s public Consumer Complaint Database.

“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.”

The CFPB began accepting complaints when it opened for business in July 2011. To date, the bureau has accepted complaints on a number of consumer financial products, including credit cards, mortgages, bank accounts, private student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection, and payday loans.

Complaint database. The bureau’s Consumer Complaint Database, the repository for consumer complaints made to the CFPB, is the nation’s largest public collection of consumer financial complaints. It includes basic, anonymous, individual-level information about the complaints received by the bureau, such as date of submission, consumer’s zip code, the product type and issue involved, and the company on which the complaint is based.

The bureau is proposing to expand the database to include consumers’ narratives of what happened. The CFPB believes that sharing narratives would help spotlight specific trends and spur competition based on consumer satisfaction with the results of their complaints. The bureau also notes that consumer narratives would help other consumers seeking information on financial products and services to make informed decisions. Reviewers could use the narrative to decide for themselves if the problems experienced by other consumers would stop them from purchasing the same product or service.

“An important benefit of making the narratives public would be to provide important context that better explains the significance of the consumer’s complaint,”Cordray explained at a field hearing in El Paso, Texas. “While the current database captures the basics of a complaint, the categorical descriptions are fairly limited. The narratives would go beyond what the database can currently provide by supplying “vital information about why the consumer believes they were harmed, and how the problem has affected the consumer’s life,” said the director.

Protecting consumer privacy. The bureau says its proposal would include built-in safeguards to protect consumers’ private information. Consumers would have to opt-in for the bureau to publish their narratives by checking a consent box giving the CFPB the permission to publish. The bureau would take “all reasonable steps” to remove consumers’ personal information before publishing narratives. Complaints would be scrubbed of information such as names, telephone numbers, account numbers, Social Security numbers, and other direct identifiers. Also, at any time, consumers could withdraw their consent.

Heightened transparency. To boost transparency, companies would be given the opportunity to post a written response that would appear next to the consumer’s story. In most cases, this response would appear at the same time as the consumer’s narrative so that reviewers can see both sides concurrently.

Complaint snapshot. In addition to unveiling its proposed policy, the CFPB released a snapshot overview of complaints handled since the bureau opened. The snapshot includes aggregated data to date on the number and types of complaints received as well as a breakdown of the particular issues reported by consumers in complaint areas.

As of July 1, 2014, the database listed more than 254,800 consumer complaints. The database only lists complaints submitted to the CFPB that companies have had an opportunity to respond to, and does not include complaints referred to other regulatory agencies, complaints found to be incomplete, or complaints that are pending with the consumer or the CFPB.

Highlights of the snapshot include the following:

  • Since beginning to accept complaints July 21, 2011, through June 30, 2014, the CFPB has handled approximately 395,300 consumer complaints.

  • Annual complaint volume has steadily increased, rising 80 percent from 91,000 in 2012 to 163,700 in 2013.

  • Mortgage complaints top the list of complaints received at 34 percent, followed by debt collection complaints at 20 percent.

  • The most common type of mortgage complaint involves problems consumers face when they are unable to make payments, such as issues relating to loan modifications, collections, or foreclosures.

  • The largest amount of debt collection complaint is about continued attempts to collect a debt that is not owed.

  • The most common type of credit reporting complaint is about incorrect information appearing on the consumer’s credit report.

Complaint videos. The CFPB said it also is releasing a series of videos of consumers who have been helped by the CFPB, some of them after submitting complaints. The series is titled “Everyone Has a Story” and will be available on the bureau’s website.

MainStory: TopStory CFPB CommunityDevelopment CreditDebitGiftCards DebtCollection FairCreditReporting Loans Mortgages TexasNews

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