You have 4 days! August 22, 2014 is the deadline to submit your comments in response to the Consumer Financial Protection Bureau’s (CFPB) proposed disclosure of consumer complaint narrative data. (https://federalregister.gov/a/2014-17274).
The CFPB maintains a public Consumer Complaint Database through which consumers may file complaints regarding financial services and products (commonly referred to as the “Complaint Portal”). The CFPB currently discloses certain complaint data it receives through the Complaint Portal. The data includes: the type of financial product, a general description of the issue, the consumer’s state and zip code, the name of the financial services company, the date the complaint was received and sent to the company, whether the CFPB has received the company’s response, whether the company’s response was timely, and whether the consumer disputed the company’s response. The company’s response is not currently included, other than one of the following general descriptions: dispute is in progress, closed with explanation, closed with non-monetary relief, or closed with monetary relief. The CFPB now proposes that in addition to the above information, it will publish the consumer’s narrative of the complaint and the financial services company’s response.
The Pros
In its policy considerations in favor of disclosing narratives, the CFPB stated that the purpose of the Complaint Portal:
is to provide consumers with timely and understandable information about consumer financial products and services, and improve the functioning, transparency, and efficiency of markets for such products and services. As a general matter, the Bureau believes that adding additional information to the Consumer Complaint Database, such as narratives, is consistent with and promotes this purpose.
The CFPB also reports that consumer, civil rights, and open government groups support disclosure on the grounds that disclosing narratives would provide consumers with more useful information on which to base financial decisions and would allow reviewers to assess the validity of the complaints.
The Cons
If the end goal is to provide more “useful information” to consumers, then the goal should be to provide the consumers with a complete and accurate view of a dispute. However, the CFPB’s statements in support of the proposed disclosure fail to give equal consideration to both sides of the story. Although the CFPB has stated that the financial services companies will have a chance to respond, the companies’ responses will be extremely limited and generic so as to ensure that they do not violate any consumer financial privacy laws or regulations. Indeed, the Graham Leach Bliley Act (“GLB”) even prohibits acknowledging that someone is your customer.
The CFPB has acknowledged that “a principal risk of publishing narratives is the potential harm associated with the possible re-identification of actual consumers within the Consumer Complaint Database.” (https://www.federalregister.gov/articles/2014/07/23/2014-17274/disclosure-of-consumer-complaint-narrative-data#p-33). The CFPB will have to remove personal information, but its redactions will not be foolproof. For example, individuals with personal knowledge of events described in a narrative may also be able to identify consumers using redacted narratives.
The risk caused by the companies’ limited ability to respond is compounded by the fact that not all consumers are well informed about the law and their financial services companies’ duties and abilities to act. Foley & Lardner LLP has reviewed and helped draft responses to several complaints that have been provided to banks and other lenders through the CFPB’s Complaint Portal. For the most part the consumers’ complaints have been rife with inaccuracies. The consumers often failed to mention key unfavorable facts regarding the consumer’s dispute. The CFPB acknowledges that the inaccuracies in the complaints may be an issue, but concludes without much discussion or explanation that the risk of misinformation is inherent in any release of complaint data. (https://www.federalregister.gov/articles/2014/07/23/2014-17274/disclosure-of-consumer-complaint-narrative-data#p-36).
If the facts are not correct, then the additional consumer narrative provided will only confuse or mislead an individual who seeks to use the database to select a financial provider. If financial services companies are prohibited under the UDAAP (unfair, deceptive, or abuse acts or practices) prohibitions from confusing and misleading consumers, then why would the CFPB promote a policy that is likely to confuse and mislead?
Will the expanded complaint narrative really provide valuable information to consumers or is it just as its name suggests—a complaint forum for consumers? There are already plenty of those sites on the internet. For every complaint that is filed through the Complaint Portal against a financial services company, there may be 100 happy customers for the same company. There is nowhere for the consumer to read the positive experiences consumers have had with a company—there are no “praise portals” for the financial services companies. Even in the companies’ advertisements their statements are restricted due to applicable advertising and disclosure laws and regulations. Thus, if the consumer views only the Complaint Portal the consumer receives a skewed view of the financial services companies, but may think the information has some significance because it appears on a government sponsored website.
It remains to be seen whether the CFPB’s proposed policy to expand the narratives allowed in the Complaint Portal can meet its stated purpose, or will only allow individuals to publish their rants on a government sponsored website.
You may comment on the CFPB’s proposed policy by visiting: http://www.regulations.gov/#!home on or before August 22, 2014, unless the date is otherwise extended.