“Narratives humanize problems,” said CFPB Director Richard Cordray. It was with that mentality that the CFPB adopted the overhaul of its Consumer Complaint Database to give consumers the opportunity to vent their frustrations through a written narrative. But the decision has continually been met with industry backlash.
The reputational risk presented to lenders in the new system is substantial. The narrative system presents the potential of unverified, and conceivably false, narratives being published online. These imbalanced narratives could not only harm lenders’ reputations unjustly, they could also provide consumers with erroneous information. The system is now live, and the CFPB has issued a request for information based on the complaints received.

Request for Information

The enhanced public-facing complaint database has been live since June 25, 2015, and already has more than 7,700 accounts of complaints from consumers concerning mortgages, accounts, credit cards, debt collection, and other services. Stemming from these complaints, the CFPB has decided to issues a request for information regarding its consumer complaint database. The CFPB hopes to use the request for information to determine whether there are ways to help the public more easily understand the information presented in the database, and how consumers can compare the information the database already contains.

The Initial Process and Design

How exactly does the process work?  In response to the large outcry of concern from lenders, the CFPB explained that it would not post any consumer narratives until a commercial relationship between the consumer and company had been proven. In addition to this, there are a few other safeguards the CFPB has designed in its efforts to heighten the credibility and the benefit of the planned expansion of the consumer complaint database.
Here is how the process was initially presented.

  1. A consumer submits a complaint directly to the CFPB
  2. Screened complaints are then forwarded through a secure web portal to the financial institution identified in the complaint
  3. That company then has 15 days to provide an initial response to the complaint, and up to 60 days to provide a full response
  4. During that time frame the financial institution is free to communicate with the consumer if needed, review the complaint, and determine what action it wants to take
  5. Once the financial institution has responded to the consumer and the bureau through a secure portal, the consumer is asked to review the response and provide feedback
  6. The CFPB then removes any sensitive information in the complaint and de-identifies the consumer
  7. The complaint is published on the Consumer Complaint Database
  8. Complaints are not be published until after the company responds or has had the opportunity to respond for 15 days.

Recent Additions

After some time and following comments, the CFPB announced that there would be four major additions made. These were added to the process before it went live:

  • Consumers will be provided with a consent form that will allow them to opt-in to public disclosure of the narrative of their complaints.
  • Consumers will be able to withdraw their consent for publication of their narratives in the Consumer Complaint Database at any time. However, keep in mind that information already downloaded by the public cannot be recalled.
  • In addition to the private responses financial institutions provide, they will be able to elect to provide public-facing narrative responses to consumer complaints. Many of those who commented on the proposed policy statement expressed concerns about the regulatory constraints imposed on their responses through the Gramm-Leach-Bliley Act, Regulation P, the Fair Credit Reporting Act, and the Fair Debt Collection Act, Because of these concerns, the Bureau plans to provide a set list of structured responses from which the financial institution may choose. There is concern in the industry that a cold, structured response, compared to the passion of consumer complaint narrative will paint the industry as out of touch and unconcerned with consumer satisfaction.

    • For example, if you look at the list of recent complaint narratives, you’ll notice that frequently, after a lengthy consumer complaint, the database gives the financial institution’s response simply as: “Company choose not to provide a public response” or “Company believes it acted appropriately as authorized by contract or law.”

  • The Bureau has decided to disclose 5-digit zip codes alongside the published narrative, except where the population in the zip code is less than 20,000.   In those cases the Bureau will disclose the 3-digit zip code, except again where the population within the 3-digit zip code is less than 20,000, in which case no zip code will be disclosed.

The new complaint system may seem to favor the consumer. But if your financial institution keeps on top of these developments and develops its protocols for responding appropriately and in a timely fashion to consumer complaints, it will improve its chances of defusing consumer complaints before they become a thorn in its side.

JaneJane Pannier is senior vice president and in-house counsel for AffirmX LLC, a developer of an innovative remote compliance review solution. Ms. Pannier is also SVP of AdvisX, a CUSO that specializes in using technology to more effectively deliver consulting services to financial institutions.