On March 19, the Consumer Financial Protection Bureau (CFPB or Bureau) adopted a proposal to publicly disclose consumer complaint narratives in its Consumer Complaint Database. The Bureau also published its final policy statement in the Federal Register on March 24.

Background

On June 19, 2012, the CFPB launched the Consumer Complaint Database (the Database). The Database was initially populated with credit card complaint data only, but has since expanded to include complaint data about mortgages, bank accounts and services, student loans, vehicle and other consumer loans, credit reporting, money transfers, debt collection, payday loans, and prepaid cards. Prior to the implementation of the March 24 final policy statement, consumer complaints were published through the Database but did not include consumer narratives.

In July 2014, the Bureau proposed a change to expand the Database to include consumer complaint narratives. In response, more than 30,000 public comments were submitted on the proposal. The final policy statement supplements and amends the Bureau’s existing policy statements establishing and expanding the Database.

The Final Policy Statement

Under the final policy statement, the Bureau will not publish a complaint narrative unless the consumer has consented by checking an opt-in form that will be included in the submission phase of the complaint. This consent can be withdrawn by the consumer at any time so long as the consumer notifies the CFPB. The CFPB will not publish any consented-to narratives until at least June 21, 2015.

To address the risks associated with reidentification of consumers, the Bureau’s final policy statement also includes a robust personal information scrubbing standard, which is modeled after the Health Insurance Portability and Accountability Act Safe Harbor Method. In addition, the CFPB plans to disclose five-digit zip codes with each narrative, except in circumstances where the population in the five-digit zip code contains fewer than 20,000 people, in which case the Bureau will disclose only a three-digit zip code. In exceptional cases where the three-digit zip code contains fewer than 20,000 people, there will not be a zip code disclosed.

The CFPB final policy statement also permits companies to submit public-facing responses to individual narratives. The proposal had included an opportunity for companies to submit unstructured narrative responses, but many industry commenters explained that privacy laws, such as the Gramm-Leach-Bliley Act, may prevent them from accurately or appropriately responding through narrative responses. In view of this, the Bureau has provided companies with a set list of structured company response options, which a company may choose to include as part of its public-facing responses in the Database. However, companies are not required to provide any such public-facing response.

Finally, the CFPB addressed the timing for posting consumer complaint narratives and company responses. The Bureau plans to disclose a complaint narrative when the company provides its public-facing response; however, posting will occur no later than 60 day after the complaint narrative is sent to the company. This time frame ensures that a company’s public-facing response, if provided within 60 days, will be disclosed at the same time as the consumer complaint narrative.

A number of industry commenters expressed concern that the Database was unbalanced because it did not include positive feedback in addition to the complaints and complaint narratives. To address this, the CFPB also issued a notice and request for information regarding the potential sharing of consumer compliments about providers of consumer products and services. Public comments on the notice are due to the Bureau by May 26, 2015.

Pepper Points: The CFPB’s final policy statement introduces a number of new reputation risks for companies that provide consumer products and services. The first of these stems from the addition of consumer complaint narratives, which provide a CFPB-endorsed and public-facing outlet for consumers to write complaint narratives. This is not unlike prominent online review websites, in that the complaints are unverified by the CFPB before posting them to the Database. The second new risk includes how, or whether, a company chooses to respond to individual complaints. This decision needs to be considered carefully by each company and integrated into its internal complaint response policies.

It has been our experience that well-managed companies always have paid close attention to consumer complaints, apart from any regulatory or supervisory mandate to do so. These companies monitor their consumer experiences, including social media feedback, to identify potential areas of improvement. It remains to be seen how this new CFPB tool will be utilized by the agency, the press, potential litigants and the industry to identify and respond to genuine consumer concerns.