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Making Consumer Voices Count

An arrow on the floor points the way for homeowners attempting to lower their monthly mortgage payment at a mortgage relief event in Atlanta, September 2014.

The Consumer Financial Protection Bureau, or CFPB, recently requested comments on its “Proposed Policy Statement: Disclosure of Consumer Complaint Narrative Data.” Read the full comment letter to the CFPB here.

The CFPB has made noteworthy efforts to process and publicize more than 395,000 complaints about financial institutions through its Consumer Complaint Database, a remarkable number for a new program that has been operating for less than three years. By providing a single, efficient route for consumers to voice complaints about a wide variety of financial actors and products, this system enables individual concerns to be raised and resolved quickly. The system also provides an opportunity for CFPB staff, outside analysts, and the general public to use the database to identify broader patterns and underlying systemic issues that cut across the financial system, including concerns that other tools may fail to capture.

Recently, the CFPB released for public comment a new proposal to release narrative data on consumer complaints. This additional data would greatly strengthen the Consumer Complaint Database by making the actual text of a complaint, excluding any personally identifiable information, public with the consent of the consumer. This effort is worthy of support, provided that consumers choose whether to make their complaints public and retain the ability to make the complaint private in the future. The CFPB should also implement the proposal’s recommendation that the financial institution’s response be made public as well.

These steps would provide more information regarding both the nature of consumers’ complaints and the processes that they go through when dealing with financial institutions. The database already groups complaints and subcomplaints into categories, but these categories cannot clearly capture all of the issues that consumers face. Releasing the full complaint narrative would provide specific information about these problems. Additionally, consumer narratives may document the unsuccessful steps that a consumer took in attempting to deal with a problem, providing additional insight about how disputes are resolved within the financial institution. As consumers’ full complaints become public, other consumers facing similar difficulties may be more likely to speak out, recognizing that they are not alone.

Rather than opposing this new tool, financial institutions should embrace the early discovery of the trends that the Consumer Complaint Database can provide. The new data could potentially identify problems in specific branches, regions, or divisions that would otherwise go unnoticed. As a result, the management of these institutions could better ensure that customer service is consistent throughout the firm and that commitments made by leadership are carried out on the ground.

The recent foreclosure crisis highlights some instances where identifying these inconsistencies would have been helpful. For example, during a 2008 hearing on mortgage servicing, a top executive at Bank of America testified before the U.S. House Committee on Financial Services that the company did not require consumers to sign waivers of unrelated rights in order to obtain a loan modification, yet consumer advocates found that the bank’s servicer did in fact use such waivers. Similarly, in the early years of the crisis, mortgage servicing executives reported that homeowners could seek assistance with loan modification prior to defaulting on their mortgages, yet line staff repeatedly told customers that they could not receive assistance until they were in default. Public disclosure of complaint narratives illustrating where policies are not uniformly applied would help highlight similar situations for financial institutions, outside analysts, regulators, and advocates.

To further strengthen the Consumer Complaint Database, the CFPB should take two additional steps:

1. In addition to the consumer’s five-digit ZIP code, the Consumer Complaint Database should include the address and ZIP code of the financial institution mentioned in a complaint. The consumer’s ZIP code already enables researchers to link complaints to data about communities where the complaints are filed. But consumers may also interact with financial institutions in locations other than where they live, such as where they work, go to school, or take care of family members. For interactions that take place through a website, mobile app, or national telephone number, this data point may not be helpful. However, when dealing with a local lender or bank branch, geographic information about specific locations would enable CFPB staff and outside advocates to test for discrepancies in service or possible discrimination.

2. Database entries should include government-issued identifiers that can facilitate accurate, computer-friendly identification of financial firms and allow analysts to identify relationships between parent companies and their subsidiaries and affiliates. Large financial institutions may have a number of related entities providing different product lines or serving different parts of the country. Linking records across related financial institutions that are operating under different names would provide greater transparency regarding the behavior of large financial institutions.

The CFPB’s proposal to lift up consumer voices in the financial marketplace through public disclosure of consumer complaint narratives is an important step toward a more transparent and accountable financial system, and CAP believes it deserves strong public support.

Joe Valenti is the Director of Asset Building at the Center for American Progress. Julia Gordon is the Director of Housing Finance and Policy at the Center. Marc Jarsulic is the Vice President for Economic Policy at the Center.