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Zane Gilmer is an attorney with the law firm of Stinson Leonard Street LLP. He is a member of the firm's litigation practice group and works out of the firm's Denver office. His practice focuses on business litigation and compliance.
The Consumer Financial Protection Bureau has many tools at its disposal to investigate possible violations. One of those key tools is the consumer complaint process, in which consumers can submit finance-related complaints directly to the CFPB. Given the CFPB's reliance on this information to investigate financial institutions and the fact that this information is available to the public, it is important for financial institutions and any other entity supervised by the CFPB to understand how the consumer complaint process works. Below is a step-by-step discussion of the CFPB's consumer complaint process.The CFPB consumer complaint process generally involves six steps, which are laid out as follows.1
Consumers may submit complaints to the CFPB related to financial institutions concerning various financial products and services, including mortgages, private student loans, credit cards, bank accounts, vehicle leases and loans, other consumer loans, credit reporting, money transfers, debt collection, and payday loans.2 Consumers can submit complaints to the CFPB by telephone, mail, fax or email. In addition, in June 2012, the CFPB launched its Consumer Complaint Database, which permits consumers to submit complaints via a web portal.3 Between July 2011 (when the CFPB first began accepting consumer complaints) and September 2015, the CFPB handled over 702,900 consumer complaints.4 A complaint will be published in the CFPB's consumer complaint database after the subject company has had the complaint for 15 days or after the company responds to the complaint, whichever occurs first.
In June 2015, despite widespread concern from financial institutions, the CFPB began including in the database a description or narrative of each consumer complaint if the consumer submitting the complaint chooses to “opt in” and agrees to have the narrative included in the database.5 According to the CFPB,
Consumer narratives provide a firsthand account of the consumer's experience. The narratives provide context to complaints, are easily searchable, and help spotlight specific trends. The narratives can also help consumers to make more informed decisions, as well as encourage companies to improve the overall quality of their products and services and more vigorously compete over good customer service.6
Although the complaint is published in the CFPB's consumer complaint database once the company has had it for 15 days, the consumer narrative is not published until, as described below, the company selects a public-facing response or the company has had the complaint for 60 calendar days, whichever occurs first.
Once the CFPB receives a complaint, the CFPB reviews the complaint and forwards it, and any documents provided by the consumer, to the company that is the subject of the complaint for a response. In some instances, the CFPB may forward the complaint information to another agency if the CFPB is not the proper regulatory agency to handle the matter.
The company is permitted 15 calendar days to review the complaint and provide its response to the CFPB. If the company is unable to respond to the complaint within the 15-day deadline, the company can obtain an extension of up to 60 days as long as, within the initial 15-day deadline, the company accesses the online company portal through the CFPB's website (“Portal”) and indicates that its response is “In progress.”7 The Portal “serves as the primary interface between [the CFPB] and companies, facilitating a coordinated response to consumer complaints.”8
As part of the company's complaint review and investigation process, it should consider contacting the consumer to obtain additional information or to attempt to settle the matter. In addition, the company should review the consumer's file, including previous communications or complaints. Further, the company should determine whether the complaint represents an isolated issue or may be a sign of a larger systemic issue with the financial product or service at issue. After the company has gathered all relevant information related to the complaint, the company must submit its response to the CFPB via the Portal, and the response must include at a minimum:
• a description of the company's efforts to investigate the issue and respond to the complaint, including attaching all responsive communications to the consumer;
• a description of communications received from the consumer in response to the steps the company took to respond to the complaint, including attaching all responsive communications received from the consumer;
• a description of any planned follow-up actions the company intends to take in response to the complaint; and
• designation of the general nature of the company's response by selecting one from a menu of the categories.
The categories of company responses are:
• Closed with monetary relief. A company should select this response if the steps it took or will take include monetary relief to the consumer. If monetary relief is provided, the company must indicate the amount of such relief.
• Closed with nonmonetary relief. A company should select this response if the steps it took or will take include nonmonetary relief to the consumer, which may include a foreclosure alternative, ceasing debt collection, correcting credit bureau submissions, changing account terms, changing solicitation practices, restoring a credit line, reopening an account, prospective rate changes, or addressing formerly unmet customer service issues.
• Closed with explanations. A company should select this response and provide an explanation of how it met the consumer's desired resolution (absent monetary or nonmonetary relief) or otherwise why no further action by the company is needed.
• Closed. Indicates the matter has been closed without other action.
• In progress. A company should select this response within 15 calendar days of receiving the complaint if it cannot be closed within 15 days. As mentioned above, if this option is selected, the company has 60 days to provide a response to the complaint.
• Alerted CFPB. A company should select this response if it cannot take action due to (i) suspected fraud related to the complaint; (ii) a pending legal matter related to the complaint; or (iii) the complaint having been submitted by an unauthorized third party.
• Incorrect company. A company should select this response if the complaint relates to a different company.
• Redirected to related company. A company should select this response if the complaint needs to be routed to another company with which the responding company is affiliated or has a contractual relationship.
• Duplicate CFPB case reported. A company should select this response if the company cannot take action because the complaint is an exact duplicate of a complaint that has already been received from the CFPB and to which a response has been submitted.
• Sent to regulator. A company should select this response if it cannot take action because the complaint relates to a product or service that requires that the complaint be routed to another regulator.
In addition to the above information, companies have the opportunity to respond to consumer narratives as part of the complaint response process. A company's response is included in the database once the company provides a “public-facing response” or after the company has had the complaint for 60 days, whichever comes first. The company can select from one of the following public-facing responses:
|Category||Published Public Response in Database|
|Company acted appropriately||Company believes it acted appropriately as authorized by contract or law|
|Factual dispute||Company disputes the facts presented in the complaint|
|Unable to verify facts||Company can't verify or dispute the facts in the complaint|
|Misunderstanding||Company believes the complaint is the result of a misunderstanding|
|Discontinued policy or procedure||Company believes complaint relates to a discontinued policy or procedure|
|Opportunity for improvement||Company believes complaint represents an opportunity for improvement to better serve consumers|
|Isolated error||Company believes complaint is the result of an isolated error|
|Third party||Company believes complaint caused principally by actions of third party outside the control or direction of the company|
|No public response||Company chooses not to provide a public response|
It is worth noting that the CFPB reports that companies have responded to nearly all--98%--of the consumer complaints it has forwarded to those companies. Dodd-Frank requires large banks and credit unions that are regulated by CFPB to respond to CFPB inquiries related to consumer complaints, but the regulations do not make clear whether other companies or other “covered persons” providing consumer financial services and products are required to submit a response.9 Nevertheless, it is safe to assume that the CFPB expects a response to the complaints it forwards, and failure to do so will likely be viewed unfavorably by the CFPB and create further issues for the company.10
Before responding to a complaint, however, a company should carefully consider how to investigate the matter and decide what the best course of action will be. For instance, if a company chooses not to provide a public-facing response, it may miss an opportunity to address the issue, not just with the complaining consumer but, more importantly, with the consumers who may search for complaints against the company in the future. In other words, the option to provide a public-facing response provides companies with a public relations opportunity to tell their side of the story. In many cases, the consumer complaint may simply be an isolated incident or a result of miscommunication, which can be easily explained by the company if it takes the opportunity to do so.
On the other hand, there may be instances in which a response may not be necessary, appropriate, or practical. For example, a consumer complaint about an issue that is minor in nature and that has since been resolved (and the database so reflects that status) may not require a public-facing response. Further, to the extent the company has reason to believe that litigation or regulatory action related to the complaint is imminent, the company may wish not to respond publicly to the complaint. In any event, the decision regarding whether to provide a response should be made after careful consideration of all relevant facts and potential repercussions.
Once the CFPB receives the company's response, it is forwarded to the consumer for review and feedback, including whether the consumer agrees with or disputes the company's response.
The CFPB then reviews the information submitted by the consumer and the company and, if applicable, shares the information with other state and federal law enforcement and regulatory authorities. The CFPB may also choose to further investigate the issues raised in the complaint. Although the CFPB has discretion to review and investigate any complaint, an investigation is more likely to happen if the company fails to provide a response to the complaint or the complaint (and others received by the CFPB) demonstrates a systemic problem related to the company's offering of financial services and products that pose risks to consumers. This is precisely why companies should properly evaluate and investigate consumer complaints at the outset to ensure not only that they remedy a specific complaint, but that the complaint does not represent a larger institutional issue.
The CFPB uses consumer complaint information in a variety of ways, including to help guide its investigation and enforcement actions, develop rules and regulations, and provide summary reporting data to the public and Congress.11
Given the number of ways in which the CFPB utilizes consumer complaint data and the various ways in which that data can pose compliance and litigation risks, companies should take the complaint process seriously.
At the same time, companies should use the information to their benefit to better understand potential areas of risk, increase customer service, and ensure that proper policies and procedures are in place for dealing with complaints related to service or product issues at the earliest stage possible.
1 For a detailed description of the CFPB complaint process, see Company Portal Manual, version 2.14, Consumer Financial Protection Bureau (May 2015), http://www.insidearm.com/wp-content/uploads/Company-Portal-Manual-FINAL-Version-2-14-May-2015.pdf?279849.
2 CFPB Publishes Over 7,700 Consumer Complaint Narratives About Financial Companies, ConsumerFinance.gov (June 25, 2015), http://www.consumerfinance.gov/newsroom/cfpb-publishes-over-7700-consumer-complaint-narratives-about-financial-companies/.
3 Consumer Financial Protection Bureau Monthly Complaint Snapshot Spotlights Mortgage Complaints, ConsumerFinance.gov (Sept. 22, 2015), http://www.consumerfinance.gov/newsroom/cfpb-monthly-complaint-snapshot-spotlights-mortgage-complaints/.
5 CFPB Final Policy Statement, Disclosure of Consumer Complaint Narrative Data, Docket No. CFPB-2014-0016, available at http://files.consumerfinance.gov/f/201503_cfpb_disclosure-of-consumer-complaint-narrative-data.pdf; see alsoCFPB Publishes Over 7,700 Consumer Complaint Narratives About Financial Companies, June 25, 2015, http://www.consumerfinance.gov/newsroom/cfpb-publishes-over-7700-consumer-complaint-narratives-about-financial-companies/.
6 CFPB Publishes Over 7,700 Consumer Complaint Narratives About Financial Companies, ConsumerFinance.gov (June 25, 2015), http://www.consumerfinance.gov/newsroom/cfpb-publishes-over-7700-consumer-complaint-narratives-about-financial-companies/.
8 Company Portal Manual, version 2.14, Consumer Financial Protection Bureau (May 2015), http://www.insidearm.com/wp-content/uploads/Company-Portal-Manual-FINAL-Version-2-14-May-2015.pdf?279849.
9 See 12 U.S.C. §5534(b).
10 Company Portal Manual, version 2.14, Consumer Financial Protection Bureau (May 2015), http://www.insidearm.com/wp-content/uploads/Company-Portal-Manual-FINAL-Version-2-14-May-2015.pdf?279849.
11 See, e.g., 12 U.S.C. §§5512(c)(1), 5512(c)(4)(B)(i), and 5493(b)(3)(D).
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