The CFPB Complaint Process is a valuable tool for the CFPB (or Bureau), but it has also been a lightning rod issue for companies. Consumers benefit whether they participate in the complaint process or not. Companies, on the other hand, are predictably averse to their dialog with consumers being published publicly, and therefore are not positioning themselves to realize the benefits of the CFPB Complaint Process. While the Bureau has placed the Complaint Process at the center of its operations, companies are simply responding to complaints, and not always taking advantage of what the Bureau is handing to them. 

There is a reason the CFPB places so much focus on Complaints. One of the more complicated requirements faced at the Bureau's onset was prioritizing its work; deciding what to tackle first, determining what could be worked simultaneously, and strategically applying the resources to accomplish initiatives set forth by the Dodd-Frank Act.

Consider that - in the years since - no other regulator has collected complaints at the rate the Bureau is collecting complaints, or shared complaint data with other regulators, states, and congressional offices. This is an important subject.

The Complaint Process has also helped the CFPB in unexpected ways. For example, during the later stages of the mortgage crisis the Bureau used complaint data to prioritize its work. When writing regulations, the Bureau uses complaint data to determine where an existing regulation may be too weak or too strong.  Researchers and economists at the Bureau use complaint data to help validate their theories, and to identify problem areas with surgical precision.

The Office of Service Member Affairs used the data to identify complaint concentrations around military bases; further analysis of the data allowed the Bureau to learn of serious potential predatory practices. Rather than simply hypothesizing, the Office of Service Member Affairs looked at complaint data to prioritize its work. Nearly every enforcement action taken has been initiated or supported by CFPB complaint data.

Evidence suggests that the value of the data is not the company’s response, which only began supporting the Bureau’s work in recent years. Rather, you will find the CFPB uses trends associated with geography, product, issue, and keywords from the consumer narratives.

Some have noted that complaint data entered by the consumer is not always accurate; consumers may enter the incorrect product, or the issue is not fully representative of the facts. This is where industry misses the boat. While companies complain that data is inaccurate, or that complaints are technically declarations of dissatisfaction (rather than complaints), the Bureau is more interested in determining whether real issues exist where they see trends.  The Bureau would not and could not rule based only upon what the consumer states in a complaint.  Why companies concern themselves with whether a complaint is technically a complaint or whether the data is accurate, and do not look at the broader picture as the Bureau does, is beyond me. The value is in the trends, which only unfold with proper analysis.

When a complaint is not accurate, a company should simply respond with a level of substance sufficient for that response. The Bureau checks a little further than the complaints before taking legal action.   Would the Bureau be interested in why so many consumers don’t know what product they have? Yes, and you should be concerned. How about geographical concentrations, gender, issue trends, or simply the number of complaints? In my opinion, companies are more worried about whether a complaint is technically a complaint, while the Bureau uses the same data to walk in your door and know exactly where to look. Don’t believe me? Look at your engagement letters and have a data analyst determine whether your complaints could have predicted exactly where the Bureau is looking.  My bet is, yes they could. 

I am upset with companies who receive MOUs or other actions in situations where the complaint data revealed their issues since day one. I am troubled with companies being sidetracked into arguing that the process is not fair, while not leveraging the tremendous value the Complaint Process provides.  This is not a problem with company complaint response teams, but rather company leadership, who should demand the following from their data teams (not response teams):

  1. A heat-map of complaints by geographic location and their changes over time
  2. Assignment and reporting of complaints by division, department, process, regulation
  3. Analytics on the narrative fields, looking for trends which may indicate UDAAP or Fair Lending clues and phrases
  4. Reporting of all investigations (request for additional information) individually and analysis of data within this set (this will tell you where the Bureau might be looking)
  5. Comparative analysis of any public data on geographic, product, issue, and survey (coming soon) rating against a true peer group. Avoid thinking that all offering your product are your peer group because they are not (put some thought into peer group definition by major product category)
  6. Reporting of debt collection by creditor, analyzing separately against your clients and beyond:
    • Vendor or Client name
    • Product – always identify the “product” (i.e. selected by the consumer)
    • Analysis of narratives within each set and across all creditors or vendors
    • The existence of an investigation
    • Perform analysis by creditor (or vendor if you are the creditor) complaints to determine if you have opportunities

The CFPB Complaint Process is extremely valuable to the Bureau.  I argue that there is more value to the company that looks at the data, analyzes its customers’ feedback, and leverages the data to mitigate risk and report clearly to executives. Establishing this process will allow your company to be ahead of the CFPB with regard to potential actions. Knowing where you are receiving feedback, and displaying a dynamic process of evaluation and reporting, will go a long way towards reducing complaints and avoiding any regulatory surprises. 


Jim McCarthy was a founding member of the CFPB and expert on the CFPB complaint process. Until September 2015 he was a Senior Product Adviser and Stakeholder Division Manager in the Office of Consumer Response. He is currently a consultant, delivering solutions to companies that leverage complaints to improve their Compliance Management Systems and predict emerging issues in real time.


Next Article: Encore Capital Reports Q1 Results, Comments on ...