In addition to announcing the availability of a new consumer complaint database, Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB) told attendees at a Consumer Response Field Hearing that complaints give the new agency three distinct and important ways to help consumers.
Each complaint is a chance to evaluate a perceived problem and see if it can be resolved quickly. CFPB has received more than 130,000 complaints from individual consumers, including complaints about mortgages, credit cards, student loans, auto loans, bank accounts, credit reports, and more and has helped consumers secure millions of dollars in monetary relief and non-monitory solutions such as cleaning up credit reports. In this way he said, our consumer response team is making a real difference in the financial marketplace.
The second important way these complaints make a difference is by informing CFPB's work and helping to identify and prioritize problems. "We know that if we hear about a particular problem from fifty consumers, that likely means it looms larger than if we hear about it from two. We know that if we begin to see a disturbing trend among the complaints we receive, that we should consider allocating some of our limited resources to combat that particular problem" Cordray said.
Consumer complaints are also a source of information that staff consults in examining financial institutions. They provide leads for enforcement work, investigating and addressing potential wrongdoing and they help guide dealing with issues of concern through consumer education and engagement. "In fact, we find complaint information to be so helpful that we also access the FTC's Consumer Sentinel database to supplement our own," Cordray said. The Bureau is also mindful of the need to share such data in return, so recently it launched a secure Government Portal to allow other federal and state law enforcement officials to view Bureau data to inform their own work.
It is important to recognize that even when complaints do not lead to an individual solution or restitution, they still make a difference. People who contact the Consumer Bureau are constantly informing its priorities and improving its work.
Third, the accumulation of complaints from many thousands of individual consumers yields an ever-more informative impression of what is happening to consumers en masse in the marketplace and thus can be helpful to industry and to consumers themselves in figuring out how they approach consumer financial issues. The key point is that not all, or even most, consumer protection comes from government agencies. The first two places to look for consumer protection are out in the marketplace, in how a business decides to treat its customers and in how effectively those customers are able to stand up for themselves when they are mistreated.
The American economy, even just the financial marketplace portion, is among the single largest uncoordinated aggregation of human behavior ever developed. It does not operate according to some central plan, but by the endless interactions of hundreds of millions of independent actors, each with their own needs, wants, expectations, patterns, and reactions. Cordray said even understanding what is happening in these huge, sprawling arenas of human life is a formidable task as we see each month as experts make erroneous predictions about growth, employment, prices, and many other economic and financial variables. The humbling lesson is that every additional piece of data that can shed more light on hard subjects like these is well worth having.
The ability to create and utilize new data that illuminates what is happening to consumers, in real time, can be immensely valuable. The more data we can assemble, process, and share, the more complete and accurate picture we can forge of this immense and seemingly contradictory creature, and the more we can come to a better understanding of it.
Cordray said that the launch today of the expanded CFPB consumer complaint database will allow the public to easily track, sort, search, and download this data. "With all of this information being assembled, the most interesting thing to watch will be not what we do with it, but what you do with it." The amount of information that can be gleaned from the Consumer Complaint Database is gigantic.
Financial companies can use the data to identify their pain points so they can detect and understand problems and improve their customer service and their general practices. Data can help them detect regulatory risks and address problems before they are faced with potential enforcement action or private litigation. They can also view the strengths and weaknesses of their competitors in a new light. And perhaps they can find things to tout in the data: taking credit, for example, for having the highest resolution rates or the quickest response times. Consumers can see which companies provide timely responses or higher rates of resolution. They can draw their own conclusions. For consumers, this will become a valuable educational and shopping tool.
It will also be possible for third party sources to rate the performance of different financial products and services by evaluating what the public, in the aggregate, has to say about them and no doubt the companies will respond with their own take. That is exactly where these matters should be fought out: in the marketplace of ideas, subject ultimately to the verdict rendered by the court of public opinion, which is just how economic marketplaces are designed to work, Cordray said.
Cordray said some have criticized the database and suggested that this information should be suppressed, but in this age of data and transparency, he believes sharing it is in everyone's best interest. Indeed, the Consumer Bureau generally supports an open-data agenda. As part of Project Catalyst, a program developed to support innovation in the consumer finance space, CFPB will be using this and other upcoming opportunities to participate in more open-data initiatives.
