CFPB 101: What Kraninger Needs To Know About The Consumer Complaint Database
Consumer Complaint Data Is Integral To Carrying Out The Consumer Financial Protection Bureau’s (CFPB) Responsibilities, Including Bringing Investigations Against Predatory Lenders and Financial Scammers
The Consumer Complaint Database Is “An Integral Part” Of The Bureau’s Work.
According To The CFPB, Consumer Complaints “Are An Integral Part” Of The Its Work On Consumer Financial Protection. The CFPB “is the first federal agency solely focused on consumer financial protection, and consumer complaints are an integral part of that work. The CFPB helps connect consumers with financial companies to make their voices heard. When consumers submit a complaint, we work with companies to get the consumer a response, generally within 15 days.” [Monthly Complaint Report, Vol. 20, Consumer Financial Protection Bureau, February 2017]
- The CFPB Publishes Consumers Complaints To Inform And Empower Consumers, Advocates, And Companies. “We also publish basic information about complaints in our public Consumer Complaint Database to empower consumers, inform consumer advocates and companies, and improve the functioning of the marketplace.” [Monthly Complaint Report, Vol. 20, Consumer Financial Protection Bureau, February 2017]
The CFPB Is Required By Law To Collect, Investigate, And Respond To Consumer Complaints.
Under Federal Statute, One Of The CFPB’s Primary Functions Is To Collect, Investigate, And Respond To Consumer Complaints. “Pursuant to 12 U.S.C. 5511(c)(2), ‘collecting, investigating, and responding to consumer complaints’ is one of the six statutory ‘primary functions’ of the Bureau. Since it began collecting complaints in July 2011, the Bureau has published a variety of reports analyzing complaints and responses. Some of these reports are specifically required by the Act. Others are intended to meet the Bureau’s objective of ensuring ‘markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.’“ [“Request for Information Regarding Bureau Public Reporting Practices of Consumer Complaint Information,” Consumer Financial Protection Bureau, 03/01/18]
The CFPB Uses Consumer Complaint Data To Identify Market Issues And Bring Investigations Against Predatory Financial Companies
The CFPB Analyzes The Consumer Complaint Database To Identify Trends And Market Issues.
The CFPB Analyzes Consumer Complaint “Data To Identify Trends And Problems In The Marketplace.” “The Consumer Complaint Database is a collection of complaints on a range of consumer financial products and services, sent to companies for response. We don’t verify all the facts alleged in these complaints, but we take steps to confirm a commercial relationship between the consumer and the company. […] Since we started accepting complaints in July 2011, we’ve helped consumers connect with financial companies to understand issues with their mortgages, fix errors on their credit reports, stop harassment from debt collectors, and get direct responses about problems with their credit cards, checking and savings accounts, student loans, and more. We analyze the data to identify trends and problems in the marketplace to help us do a better job supervising companies, enforcing federal consumer financial laws and writing rules and regulations. We publish reports on complaints and share information with state and federal agencies.” [Consumer Complaint Database, Consumer Financial Protection Bureau, accessed 04/24/18]
The CFPB’s Office Of Consumer Response Publishes A Monthly Report On Consumer Complaints.
The CFPB’s Office Of Consumer Response Publishes A Monthly Report On Complaints They Have Received. The Office of Consumer Response releases monthly reports detailing the complaints they have received that “provide timely information and insights into the type of complaints consumers are submitting with spotlights on a product or market and a city and state.” [Monthly Complaint Report, Vol. 26, Consumer Financial Protection Bureau, 10/31/17]
- The Office Of Consumer Response Takes Questions, Processes Complaints, And Shares Data in Order To “Level The Playing Field.” The CFPB’s “Office of Consumer Response answers questions, handles complaints, and analyzes and shares data to level the playing field and empower consumers to take more control over their financial lives.” [Operations, Consumer Financial Protection Bureau accessed via Archive.org, 03/05/18]
Consumer Complaints Can Lead To CFPB Investigations Against Bad Financial Actors.
Investigations Or Referrals To The CFPB’s Division of Supervision, Enforcement, and Fair Lending & Equal Opportunity May Come Out Of Analysis Of The Complaint DatabaseThe CFPB’s Office of Consumer Response noted, “complaint analysis may prompt investigation of individual complaints or groups of complaints and possible referral to colleagues in the CFPB’s Division of Supervision, Enforcement, and Fair Lending & Equal Opportunity for further consideration. Consumer Response shares complaint data, analyzes, and offers insights to other offices to help the Bureau: Understand problems consumers are experiencing in the marketplace; develop financial education tools to empower people to know their rights and make informed decisions; scope and prioritize examinations and ask targeted questions when examining companies’ records and practices; and investigate issues and take action when we find problems.” [Statement, Consumer Financial Protection Bureau, 01/29/18]
The Consumer Complaint Database Is Currently Under Threat
Kathy Kraninger Has Not Committed To Preserving The Consumer Complaint Database Despite Its Integral Role To The CFPB’s Mission.
Kraninger Was Unwilling To Commit To Preserving The Consumer Complaint Database As CFPB Director.
Kraninger Would Not Commit To Keeping The Consumer Complaint Database In Its Current Form. Kathy Kraninger was asked, “Will you pledge to maintain the Consumer Complaint Database in its current, transparent form so that financial companies can be held accountable by their customers?” She responded, “As I have previously stated, I will not prejudge any decision that will come before me at the Bureau, including whether to keep the consumer complaint database public. I am aware of the statutory responsibility for the Bureau to collect and track consumer complaints. If confirmed, I will fully examine this issue and all appropriate considerations with a focus on the [sic] ensuring the Bureau is transparent and accountable to the American people for its actions.” [“Questions for Ms. Kathleen Laura Kraninger, Director-Designate, Bureau of Consumer Financial Protection, on behalf of Ranking Member Brown, Senator Jack Reed, Senator Robert Menendez, Senator Elizabeth Warren, Senator Brian Schatz, Senator Chris Van Hollen” US Senate Committee on Banking, Housing, and Urban Affairs, 07/19/18]
Kraninger Wants To Limit Consumer Data Collection “Only To What Is Required Under Law.”
Kraninger Wants The CFPB To Limit Its Collection Of Consumer Data “Only To What Is Required Under Law And Is Necessary To Carry Out Its Mission.” “Under my leadership, the bureau would limit data collection only to what is required under law and is necessary to carry out its mission and ensure that that data is protected. The issue clearly needs more attention because consumers are unaware of the vulnerabilities they face and unsure of what steps to take to protect themselves.”[“Consumer Financial Protection Bureau and Export-Import Bank Confirmations,” C-SPAN, 07/19/18]
Mick Mulvaney Worked To Gut The Consumer Complaint Database
The CFPB Is Reviewing Consumer Complaint Database As Part Of Mulvaney’s Review Of CFPB Functions
In April 2018, The CFPB Issued A Request For Information (RFI) As Part Of Mulvaney’s Inquiry Into Ensuring The CFPB Is “Fulfilling Its Proper And Appropriate Functions.” On April 11, 2018, the CFPB “issued a Request for Information (RFI) on its handling of consumer complaints and inquiries. The Bureau is seeking comments and information from interested parties to assist the Bureau in assessing its handling of consumer complaints and consumer inquiries and, consistent with law, considering whether changes to its processes would be appropriate. To date the Bureau has received 1.5 million consumer complaints. This is the 12th in a series of RFIs announced as part of Acting Director Mick Mulvaney’s call for evidence to ensure the Bureau is fulfilling its proper and appropriate functions.”[“CFPB Issues Request for Information on Consumer Complaints and Inquiries,” Consumer Financial Protection Bureau, 04/11/18]
- The RFI Was Issued In Order To Receive Public Comment On Potential Changes To The Consumer Complaint And Inquiry Handling Processes. The RFI sought public comment on “potential changes that can be implemented to the Bureau’s consumer complaint and inquiry handling processes, consistent with law, to consider whether any changes to existing practices would be appropriate given the Bureau’s statutory objective to provide consumers with timely and understandable information about consumer financial products and services to make responsible decisions as well as its statutory obligations to (1) establish reasonable procedures to provide timely responses to consumers and (2) centralize the collection of consumer complaints regarding consumer financial products or services.” [Request for Information Regarding the Bureau’s Consumer Complaint and Consumer Inquiry Handling Processes, Consumer Financial Protection Bureau, 04/11/18]
Mulvaney Moved The Office Of Consumer Response As Part Of A Broader Restructuring Of The CFPB
In February 2018 Mulvaney Announced He Would Move The CFPB’s Office Of Consumer Response From Operations To Community Education.In February 2018, Mick Mulvaney announced he would “relocate the Office of Consumer Response from the Operations Division to the Community Education and Engagement Division.” [Christopher Willis, “Mulvaney reorganizes CFPB Office of Fair Lending,” Ballard Spahr LLP, 02/01/18]
Kraninger Will Carry On Mulvaney’s Legacy At The CFPB
Kraninger Supports Mulvaney’s Actions As Acting CFPB Director.
During Her Confirmation Process, Kathy Kraninger Said That Mick Mulvaney Was Doing A Good Job At The CFPB And “Couldn’t Point To Any Actions He’d Taken With Which She Disagreed.” “Kraninger, 43, has been a deputy of Mulvaney at the White House Office of Management and Budget. She told senators at her confirmation hearing this summer that Mulvaney was doing a good job at the CFPB, and in written responses to questions later that she couldn’t point to any actions he’d taken with which she disagreed.” [Jim Puzzanghera, “Senate confirms new consumer financial protection chief: Kathy Kraninger, protege of industry-friendly Mick Mulvaney,” Los Angeles Times, 12/06/18]
Rhetoric Vs. Reality: Correcting The Record On The Consumer Complaint Database
The Consumer Complaint Database Is An Important Tool For Both Industry Groups And Other Government Regulators.
RHETORIC: Industry Groups Have Voiced Concern About “The Potential Misinformation Generated By The” Consumer Complaint Database.
In September 2015, “industry organizations including the Mortgage Bankers Association (MBA) and Consumer Bankers Association, among others,” sought changes to the way CFPB “collected and displayed” complaints to the public.The MBA argued “that the CFPB change its process for publishing consumer narratives, citing their ‘unsubstantiated’ nature.” The Consumer Bankers Association said it was most concerned about “‘the potential misinformation generated by the Database.’“ [Elizabeth Ecker, “Mortgage Industry Says CFPB Complaint Process Needs to Change,” Reverse Mortgage Daily, 09/03/15]
REALITY: The CFPB Does Not Publish Complaints That Are Submitted by an Unauthorized Third Party.
The CFPB Does Not Publish Complaints In Their Consumer Complaint Database If It Determines The Complaint Was “Submitted By An Unauthorized Third Party.” “To protect consumer privacy, companies generally confirm with the consumer that anycomplaint submitted on their behalf by a third party was authorized. Companies alert theBureau if they determine that a complaint was submitted by an unauthorized third party. Suchcomplaints are not published in the Consumer Complaint Database or included in company specific complaint volume presented in this report.” [“Monthly Complaint Report“, Consumer Financial Protection Bureau, February 2017]
REALITY: An Audit of the CFPB’s Consumer Complaint Database Found Only a “Relatively Small” Number of Inaccuracies.
In September 2015, The Office Of Inspector General (OIG) At The Federal Reserve Board Published The Findings Of An Audit Of The CFPB’s Consumer Complaint Database.OIG found that the Office of Consumer Response had “implemented controls to monitor the accuracy of complaint data in the internal case management system,” but had “not established separate management controls to ensure the accuracy of data extracted from the system and included in the Consumer Complaint Database.” The audit noted that the number of complaints with identified inaccuracies “was relatively small,” but “enhancing existing controls would help ensure that as the number and types of complaints published increase, overall reliability of the data is maintained.” [“Opportunities Exist to Enhance Management Controls Over the CFPB’s Consumer Complaint Database,” Office of Inspector General of the Federal Reserve Board, 09/10/15]
REALITY: Financial Institutions Utilize the Consumer Complaint Database to Assess Compliance Issues and Market Opportunities.
“Banks And Other Consumer Lenders” Use The Consumer Complaint Database To “Assess How Their Own Risk Of Getting Hit By Regulators Stacks Up With Their Competitors” And “To Assess Potential Market Opportunities.” “But if the CFPB database gets pulled behind a veil, as both House Republicans and the Trump administration are proposing, the consumer finance industry will encounter a little-discussed downside: companies regulated by the CFPB have become users of the database, and they will no longer have access to the insights it provides. Banks and other consumer lenders analyze the data to assess how their own risk of getting hit by regulators stacks up with their competitors, according to industry watchers. They also use it to assess potential market opportunities, areas where they can provide a better customer experience than their competitors.” [Kevin Wack, “The downside of scaling back the CFPB complaint database,” American Banker, 06/26/17]
REALITY: Companies “Paid Attention” To Consumer Concerns When the CFPB Started Publishing Complaints on its Website.
According To Professors At St. John’s University, The CFPB’s Consumer Complaint Database Makes “Companies That Might Previously Have Ignored Negative Feedback [Pay] Attention.”“When the bureau began publishing consumer complaints on its website, companies that might previously have ignored negative feedback paid attention. Financial institutions have responded to complaints to the CFPB more than 700,000 times, often by providing a remedy to the consumers.” [Jeff Sovern, Ann L. Goldweber, and Gina M. Calabrese, “Why We Need To Save The Consumer Financial Protection Bureau,“ Huffington Post, 07/14/17]
REALITY: The CFPB Works With Other Agencies to Collect Consumer Complaints.
Between July 2011 And February 2013, “Referrals From Other Regulators And Agencies Accounted For 32 Percent Of All Complaints Received” By The CFPB. “From July 21, 2011 through February 28, 2013, the CFPB received approximately 131,300consumer complaints […] Referrals from other regulators and agencies accounted for 32 percent of all complaints received. [“Consumer Response: A Snapshot of Complaints Received,“ Consumer Financial Protection Bureau, March 2013]
# # #