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Consumer watchdog bares it all; Banks complain
Richard Cordray, nominee for director of the Consumer Financial Protection Bureau, testifies at a confirmation hearing before the Senate Committee on Banking, Housing and Urban Affairs on March 12, 2013 in Washington, DC.
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The Consumer Financial Protection Bureau’s website is now home to the country’s largest public database of consumer complaints.
When the CFPB posted 19,000 consumer complaints on its website last summer, people responded with infographics and iPhone apps to process the data. The bureau just upped the number of complaints to more than 130,000, and it’s asking for new tools.
CFPB Director Richard Cordray says consumers can use the database to compare financial companies, and banks can use it to improve their service.
“For us it informs our work,” he says. “If we’re getting a number of complaints on an issue that really brings it to our attention.”
The chart below was built using the CFPB's publicly-accessible database and includes a list of each individual complaint and what it was about.
More than half the complaints are about mortgages, and almost 60 percent of those are over loan modifications, collections or foreclosure. Almost 80 percent of bank account complaints are about checking accounts.
The CFPB checks whether consumers have relationships with the companies, but it doesn’t make sure the gripes are valid, and that bothers some bank trade groups.
“This is no different than having data dumped on how many sightings Elvis has had at McDonalds,” says Richard Hunt, president of the Consumer Bankers Association. “Let’s make sure this is verified information. That’s all we’re saying.”
The bureau says its open-data agenda is the way to the future, and this time it wants tweets from people who find interesting trends.
I think that the banks have a point. Unless the CFPB requires detailed documentation from consumers for a statistically significant subset of complaints and validates them, the data has zero credibility. As a commenter on the CFPB website said, "It's incredible...that the deep thinkers at this agency concluded that this database in its present form was a good idea...A whole lotta sizzle, zero steak."
Of course, validating the complaints would require Republicans to agree to (a) agree to Cordray's recess confirmation and (b) provide the necessary funding for researching the complaints, and they've sworn to make the agency impotent. The courts might even invalidate Cordray's recess confirmation soon, so they have no incentive to help consumers.
Validating the complaints is relevant. The key information is that the consumers feel abused. They may have been treated legally according to the fine print in their account terms and conditions, but if they are unhappy it is likely that they did not understand the rules. You just need to understand the purpose of the data. It does NOT imply violations of the law but only unhappy customers.
