April 16, 2013

The CFPB’s Consumer Complaint Database and the Data Quality Act

Editor’s Note:  How does the CFPB perform it’s pre-dissemination review, mandated by OMB in its government-wide Information Quality Guidelines, to verify the quality of the third-party information it is disseminating?

From: RegBlog

CFPB Debuts an Expanded Consumer Complaint Database

Lauren-Kelly Devine

The Consumer Financial Protection Bureau (CFPB) has announced the addition of over 90,000 consumer financial complaints to its online database.

The agency recently unveiled the expanded database, citing the need to provide consumers with more information about products and services before making important financial decisions.  However, representatives from the banking industry have heavily criticized the public availability of the data.  They fear unwarranted reputational damage, noting that complaints are not fully verified by the agency before being released.

The newly available complaints greatly expand the scope of the CFPB’s existing database, which the agency debuted last summer.  While the original database featured credit card-related complaints, the new system includes complaints related to a wide range of financial products and services, including mortgages, student loans, automobile loans, and leases.

CFPB Director Richard Cordray indicated that the agency’s primary motivation for releasing such large amounts of data is to enhance transparency.   The Bureau contends that increasing the availability of information to consumers and businesses will result in a stronger financial market, bolstering the “marketplace of ideas” and leading to better practices.

The CFPB coupled its announcement of the new releases with a “call to action” for community members to take advantage of the “more than one million data points” now publicly available.   The Bureau hopes to stimulate outside groups—including researchers, consumers, and banks—to take advantage of the immense stores of data to produce key insights into financial trends and practices.  The database is fully searchable, and it contains detailed information including the complaining consumer’s ZIP code, the submission date, and—most controversially—the name of financial company against whom each complaint was levied.

Many financial companies and industry representatives have disputed the CFPB’s decision to include specific company names in the database.  Richard Hunt, president of the Consumer Bankers Association (CBA), suggested that regulators have demonstrated a “gotcha mentality,” publishing vast quantities of consumer complaints that are unverified.  Upon the initial launch of the database, the CBA formally requested that “issuer identification” information connected to the complaints be omitted, urging that a more “balanced approach” be adopted.  Hunt also expressed concern that, because the CFPB will only include identifying information for banks with assets of $10 billion or more, it misleads consumers into assuming that only large financial institutions attract consumer disputes.

Since the launch of the new database, certain issuers have been forced to respond to a large number of complaints levied against them, now that complaints are publicly available.  For example, analysts reportedly found that Bank of America received nearly 30% of complaints in the database, mostly related to its mortgage practices, prompting the company to release public statements assuring consumers that it is working to address consumer concerns.

Faced with industry objections, the CFPB has stood by its decision to make company identification information accessible.  Pursuant to its policy statement, although the agency does not verify the allegations in consumer complaints prior to publication, the CFPB does ensure that a “commercial relationship between the consumer and the company is substantiated before the complaint is added to the database.”  When a consumer submits a complaint to the CFPB, the agency will include it in the database only after the company provides a response to the complaint or after fifteen days have passed, whichever comes earlier.

Along with its updated database, the CFPB published a report analyzing all complaint data received up to March 1, 2013.  The publication reveals that more than half of all financial complaints received are mortgage-related.  Most of the mortgage concerns involved “problems consumers face when they are unable to make payments,” such as loan modification negotiations and foreclosure procedures.

The CFPB indicated that it plans to add credit-reporting complaints to the database soon and will continually update the content in the database as the agency accepts more types of consumer complaints in the near future.

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