The Consumer Financial Protection Bureau (CFPB or the Bureau) recently announced that it will keep its Consumer Complaint Database public. At the same time, the CFPB unveiled changes to the Database that are designed to add context to consumer complaints and to assuage concerns raised by financial firms.
The CFPB's Consumer Complaint Database was created pursuant to a mandate in the 2010 Dodd-Frank Act, the statute that established the Bureau itself. As its name suggests, the Database provides a place for consumers to register complaints regarding financial firms—including banks, debt collectors, and credit bureaus. Moreover, although the Dodd-Frank Act does not require that the Database be publicly available, former CFPB Director Richard Cordray decided to make the information public.
In addition to cataloguing consumer complaints, the CFPB forwards complaints to the subject companies, which are required to address them. The CFPB publishes complaints after the company responds by acknowledging a commercial relationship with the customer, or after 15 days, whichever comes first. The Bureau also maintains a public record tracking whether the issues raised in the complaints were addressed.
Thus, the Database serves several important purposes. It allows consumers not only to post and to view each other's complaints, but also to obtain responses and, potentially, relief from companies. It also helps watchdog groups, academics, and the private sector to analyze and call attention to problems. Likewise, it informs the CFPB regarding problems that consumers are experiencing in the marketplace, thereby helping the Bureau to more effectively regulate consumer financial services and products and educate consumers regarding these services and products. The Bureau reports on complaint trends each year in its Consumer Response Annual Report to Congress.
It is widely known that the CFPB enforcement division looks to consumer complaints as a primary source of leads for investigations and possible enforcement actions. However, unlike a similar database maintained by the Federal Trade Commission, which is not publicly available, the CFPB Complaint Database allows financial institutions to monitor complaints and issues and identify and correct trends or systemic issues. Thus, the Database also serves as a resource for companies trying to enhance their compliance management and forestall issues that might otherwise result in litigation or complaints filed with state attorneys general.
Nevertheless, the Database is not without its critics in the industry. Financial firms have argued that the Database allows consumers to air unverified grievances, and that it fails to provide necessary context.
What Is Changing, and What Is Staying the Same?
In response to such concerns, the CFPB announced several changes to the Database. Perhaps most importantly, the Database will contain modified disclaimers that seek to add context to the complaints. These disclaimers state that the CFPB does not verify all allegations in complaint narratives or adopt the views of the complaints, and that unproven allegations should be regarded as opinion, rather than fact. The Bureau's disclaimers also notify readers that the complaints on the Database are not a statistical sample of consumers' experiences or necessarily representative of all consumers' experiences, and that the volume of complaints should be considered in the context of a company's size and/or market share. In other words, a large company might be expected to receive a greater number of complaints than a smaller one.
In addition to these disclaimers, the CFPB will now place a greater emphasis on providing financial information and resources to consumers to help address their questions before they submit a complaint. It will also provide information to consumers who wish to contact companies directly to get answers to their questions rather than submit a complaint. Moving forward, the CFPB plans to explore expanding a company's ability to respond publicly to individual complaints listed in the Database.
It remains to be seen whether the new changes will strike an effective and satisfactory balance—between consumer protection principles and mitigating the concerns identified by financial institutions. Industry participants are encouraged to continue to integrate the Database and other sources of consumer complaints and issues into their compliance and risk management processes.