As the consumer finance industry is now aware, on June 25, 2015, consumer narratives became publicly available on the Consumer Financial Protection Bureau’s (CFPB) Consumer Complaint Database. As of August 1, 2015, the Bureau has handled over 677,000 complaints across all products. Roughly 105,000 of these complaints related to the credit reporting industry. What’s more, the number of consumer complaints related to credit reporting has increased by substantial margin over the last month and year. Therefore, it should come as little surprise that this month’s consumer complaint snapshot (the Snapshot) focuses on credit reporting complaints. 

As CFPB Director Cordray indicates, “[w]hether a consumer is trying to get a mortgage, apply for a student loan, or buy a car, credit reports are fundamentally important in allowing people to access their financial goals.” It naturally follows that credit reporting companies are a major focus of the CFPB due to this heavy reliance and importance of credit reports to consumers. In fact, of all credit reporting complaints submitted to the CFPB between March and May of this year, 97 percent involved just three nationwide credit reporting agencies. 

The Snapshot indicates complaints focus heavily on credit reports that appear to contain incorrect information, such as debts already paid or debts not yet due, which can negatively impact a consumer’s credit score --that is, if the consumer is able to access their credit report at all. Consumers have also expressed frustration with the arduous identification process which is in place for the protection of personally identifiable private information or too difficult or cumbersome to maneuver to obtain their report. Alternatively, consumers may also feel that mailing such private identifying information, in order to receive a copy of their report, is unsecure and time-consuming. 

Overall, within the financial product or service population of complaints received by the CFPB, debt collection held 31% (approximately 8,224 complaints), while credit reporting came in second with 6,696 complaints. Mortgages rounded out the top three most complained about financial product or service for July 2015 with 4,498 complaints. 

In addition to the focus on complaints related to the credit reporting industry, this month’s Snapshot also highlights the consumer complaint statistics from the Los Angeles, California metro area. In a brief comparison to the national statistics, consumers in Los Angeles have submitted mortgage complaints at a higher rate—35 percent of total complaints—than the national average, which is 28 percent of total complaints. For consumers in Los Angeles, credit reporting complaints and debt collection complaints make up a smaller percentage of the complaints they have submitted than consumers nationally.

The public availability of the consumer complaints creates additional risk exposure for not only the credit reporting agencies, but also those entities that provide the reporting information to those agencies. Banks and servicers alike need to enforce strict reporting procedures and establish extensive training programs for consumer complaint response teams to ensure that only accurate information is being sent for reporting. The ability for consumers, regulators, and investors to peruse the complaints made to, and about, a given entity could have a long-term financial and reputational impact.

Click here for The CFPB’s Monthly Complaint Report.

Practice Tips:

  • Develop quality controls and checks in your credit reporting (FCRA) policies and procedures to ensure that only accurate information is being reported.
  • Keep detailed records and notes within your system of record of all efforts taken to investigate and review the allegations made in the consumer complaint. If corrections are necessary, note all corrections made to ensure a proper record trail is created for future reference. 
  • Maintain imaged copies of all complaints received, acknowledgements and responses sent to the consumer along with any supporting evidence.