On March 19, 2015, the Consumer Financial Protection Bureau (CFPB) issued a new consumer complaint policy that gives individual complainants the ability to provide narrative versions of their complaints about a company, product or service.  While the CFPB has been accepting consumer complaints since its inception in 2011, historically, the Consumer Complaint Database has provided only a limited amount of basic information about a complaint and a company’s response, and there has been no option to share a narrative submission.  To date, the CFPB has handled more than 558,800 such complaints, with mortgage and debt collection concerns being the most frequently raised issues by consumers.

According to a CFPB press release, the rationale behind the new policy is that “narratives provide a first-hand account of the consumer’s experience, and adding the option to share them will greatly enhance the utility of the database.”  The press release goes on to say that “narratives will provide context to complaints, spotlight specific trends, and help consumers make informed decisions. The narratives may encourage companies to improve the overall quality of their products and services, and more vigorously compete over good customer service.”

Some details on the new policy include the following:

  • Consumer opt-in option. As of March 19, 2015, after a consumer submits a complaint online, there will be an option for that consumer to check a box and “opt in” to sharing the complaint’s narrative. The CFPB will not publish any narratives for at least 90 days after the policy’s publication in the Federal Register in order to give companies an opportunity to familiarize themselves with this new system and their ability to respond to consumer complaints.  Consumers also can opt out at any time.
  • Confirmed relationship with the financial institution. In order to be eligible for publication, a narrative must meet several requirements, one of which is that the consumer must have a “confirmed relationship” with the financial institution. Specifically, the commercial relationship will be “confirmed by the company before any complaint data is disclosed in the Consumer Complaint Database.”
  • Personal identification materials scrubbed. The CFPB will scrub narratives of all personal information, including names, addresses, social security numbers and other such personal identifiers.
  • Company responses. The CFPB will disclose the consumer narrative when the company provides its public-facing response, or after the company has had the complaint for 60 calendar days, whichever comes first. Companies can select from a set list of structured response options to address the consumer’s narrative complaint. Companies are under no obligation to offer public responses; however, a company will have up to 180 days after a consumer complaint is routed to it to select an optional, public response.  The CFPB states that it generally plans to adopt a company’s recommended response, but it reserves to right to “assess whether there are good-faith bases for the recommend[ed response].”

This new policy is controversial and will certainly have an impact on McGuireWoods’ clients in the consumer financial space.  As industry commentators have observed, complaints likely will take on an unwarranted level of credibility by virtue of their appearing on the CFPB’s website.  Unverified narrative complaints also pose a serious reputational risk for consumer financial services companies.  Further, clients may be exposed to increased litigation as consumer rights groups and the class-action litigators look to these narratives in order to help them identify “trends” of illegal activity.  Moreover, because companies are limited in the manner in which they can respond, they may have difficulty combating false or disparaging narratives.  To the extent that companies want to limit or eliminate narrative responses through settlement, the CFPB has indicated that it will “look disfavorably upon agreements that require a consumer to withdraw his or her consent to have a narrative published as a condition of settlement.”