Last week, the Consumer Financial Protection Bureau announced it would make public consumer complaints regarding credit card issuers, including the names of those issuers. While the CFPB has yet to announce the same for mortgage complaints, which it also is in the process of gathering, the decision could have implications for financial services companies, depending on the future direction the agency takes.
The information to be made public from the database outlines all complaints regarding credit cards as well as the issuing companies.
“This was a policy decision about what information to release,” says Chris Willis, partner with Ballard Spahr LLP. “They decided to release information identifying the credit card issuers. That was done over the objection of the industry, as noted in comments by the American Bankers Association.”
ABA stated its objection to the decision upon the announcement.
“While our industry stands ready to work with the CFPB to resolve customer concerns, the Bureau’s plan to release unverified data is disappointing and could mislead consumers,” said Kenneth Clayton, ABA’s executive vice president of legislative affairs and chief counsel. “Publishing allegations is often different than publishing facts. The Bureau itself acknowledges the complaints could be inaccurate, and in fact plans to disclaim their accuracy.”
While the CFPB hasn’t made any statement about its decisions regarding mortgage complaints, its stance on credit cards could have implications for other markets, Willis says.
“The belief is that having made the decision to release the data on a company by company basis that they will do the same thing in the mortgage realm,” he says.
The problem isn’t necessarily what is being reported and made public, but what the average consumer does not see, Willis explains.
“The complaint comes from a select set who choose to complain,” he says. “By taking this info and releasing it in a way that is specific to particular companies, a reader may generalize and think that all or some might have that experience when in fact, an incredibly small percentage do. That’s amplified because [we are only seeing] those upset enough to go online and file a complaint.”
Ultimately, the database includes only the unhappy customers, but not the happy ones, potentially leading consumers to draw conclusions without all of the necessary information.
“It’s important for advocates and research purposes,” Willis says of the complaint database. “But what bothers me is the idea that policy decisions will be made on such a small sample of consumer comments. The consumer products at issue may be working ver well for the vast majority of people who use them.”
Written by Elizabeth Ecker