Banking Group Urges CFPB to Verify Complaint Data

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By Jeff Bater

Sept. 1 — A banking industry group is urging the Consumer Financial Protection Bureau to verify raw complaint data before working to “normalize” the information.

In a statement Sept. 1 that announced a comment letter to the agency, Richard Hunt, president of the Consumer Bankers Association (CBA), said the CFPB has “a fundamental duty” to publish accurate, reliable information.

The bureau made a request in June for industry feedback, saying it was looking for ideas to enable the public to more easily understand information in its database and make comparisons of the complaints by normalizing, or adding additional context to, the complaint data.

Misleading Consumers 

“Publishing out of context, unverified data will only mislead consumers,” Hunt said. “As outlined in the letter CBA submitted yesterday, we urge the CFPB to shift their focus. They must verify the data before they work to normalize it because only then will consumers truly benefit from the ‘complaints.’”

The CFPB put out its request for information (RFI) the same day it published narratives by consumers complaining about their treatment by banks and other financial companies. The narratives were a controversial enhancement to the consumer complaint database that the CFPB started in 2012.

The CBA was one of the critics of the agency's plan to publish the narratives. Back in June, Hunt said “unverified one-sided narratives” do not help consumers and called the move “a public shaming of banks”.

Bad Data 

In its comment letter, the CBA said its member banks resolved complaints directly with customers long before the CFPB established the database and will continue to do so. Bad data generated by the database could sway consumers away from financial institutions that may offer products and services that would benefit them, the industry group said.

“While industry has long advocated for normalization, we continue to be concerned consumers are being misinformed by unverified data; stress the importance of cautiously assessing how to properly normalize data; and urge the bureau to adopt informed disclosures to promote transparency in the marketplace.”

The CBA urged the CFPB to follow the lead of other agencies, such as the Consumer Product Safety Commission, by verifying complaints and establishing an appeals process.

Authenticate Substance 

“We urge the CFPB to authenticate the substance of the database by establishing a mechanism in the private company portal for companies to flag communications that do not amount to complaints, and thus should be eliminated from the database,” the CBA said.

It also asked the CFPB to allow companies to appeal communications that have the potential to mislead consumers, including the following four categories: materially inaccurate communications, bad faith complaints, inquiries, and duplicates.

As for the normalizing process, the CBA suggested the CFPB conduct a “detailed study” analyzing how to best normalize data. The group pointed out the agency's research and markets division has previously produced detailed studies on a range of topics, including arbitration and debt collection. “We suggest this division collaborate with industry research groups who are already engaging in normalization to establish a formal, quantifiable process. Currently, market research groups are normalizing data with public metrics – not proprietary information from the institutions,” the CBA said, adding that demanding private information would result in unexpected additional costs.

MBA Letter 

In a separate letter, the Mortgage Bankers Association, while strongly objecting to “the public display of unsubstantiated complaint narratives in the database,” suggested steps for the CFPB to consider in a normalization process.

“In the event the CFPB continues to post unverified complaints we believe that there should be normalization and changes to the database to make the information more accessible to consumers,” the group wrote in the Aug. 31 letter.

The CBA recommended the CFPB separate servicing and origination complaints because those two processes are distinct and that combining the two categories “could lead to unnecessary confusion for consumers.” The group also suggested establishing take down procedures for complaints that have not required action and including some information about the context for a complaint — a time frame, for example, describing the borrower’s last payment date.

To contact the reporter on this story: Jeff Bater in Washington at jbater@bna.com

To contact the editor responsible for this story: Seth Stern at sstern@bna.com

The CBA statement and letter can be seen at http://op.bna.com/bar.nsf/r?Open=jbar-9zxqkn.

MBA's letter is viewable at http://op.bna.com/bar.nsf/r?Open=jbar-9zxsrt.