Yesterday, in advance of a field hearing being held today on consumer complaints, the CFPB released a proposal to expand the amount of information that will be included in the Consumer Complaint Database to include certain consumer complaint narratives, along with any response to the complaint submitted by the identified financial institution. The CFPB already collects the narrative information as part of the complaint intake process, but to date has not published narratives over privacy concerns it believes it now has addressed. The CFPB describes the proposed change as a natural extension of a policy designed to “provide consumers with timely and understandable information about consumer financial products and services, and improve the functioning, transparency, and efficiency of markets for such products and services.” The CFPB will accept comments on the proposal for 30 days following publication in the Federal Register.
Under the proposed policy, the CFPB would seek consumer consent for publication of the complaint narrative, and would “scrub” personal information from each such narrative. The CFPB would also allow the identified company to submit a response to the narrative to be published. A company that wishes to publish a response would be instructed not to provide direct identifying information in its public-facing response, and the CFPB would take reasonable steps to remove personal information from the response to minimize the risk of re-identification.
The CFPB has been considering publishing complaint narratives for some time, and has faced pressure from consumer advocates seeking publication of narratives. Indeed, the CFPB acknowledges this influence in the proposal, stating that in response to a prior proposed complaint policy statement, “consumer, civil rights, and open government groups supported disclosure on the grounds that disclosing narratives would provide consumers with more useful information on which to base financial decisions and would allow reviewers to assess the validity of the complaints.” In addition, during a March 2013 field hearing on consumer complaints that corresponded with a major expansion of the complaint database, consumer groups repeatedly stressed the need for more specific complaint data, including the full narrative description of complaints submitted by consumers.
The CFPB now believes that with privacy concerns addressed, the benefits will outweigh risks associated with publishing the complaints. To assess the benefits and risks of disclosing narratives, the CFPB focused on the direct and indirect benefits to consumers, the benefit to the CFPB, and the advancement of open government principles. The CFPB identifies the following as potential benefits:
- allowing consumers to share specific stories may expand the number of complaints submitted and enhance the CFPB’s consumer response function;
- additional information will increase use of the complaint database by advocates, academics, and the press; and
- consumer finance markets will benefit as the narratives influence companies to adjust prices to match product quality and improve customer service to remain competitive
The CFPB has demonstrated through its examination and enforcement activity that consumer complaints play a major role in the Bureau’s risk-based approach to supervision and enforcement, and the proposal admits that by increasing consumer complaint volume, publication of narratives would benefit “the many Bureau functions that rely, in part, on complaint data to perform their respective missions including the Offices of Supervision, Enforcement, and Fair Lending, Consumer Education and Engagement, and Research, Markets, and Rulemaking.”
Although it acknowledges that “trade groups and industry commenters nearly uniformly opposed disclosure of consumer complaint narratives,” the CFPB’s proposal makes only a superficial attempt to address those concerns. For example, the CFPB currently takes no steps to verify the accuracy of a complaint before it publishes the complaint, and the policy proposal does not propose to alter that process. The proposal admits that there is a risk that financial institutions could incur “intangible reputational damage” as a result of the dissemination of factually incorrect complaint narratives. It also briefly mentions the lost opportunity cost of consumers that may have otherwise done business with a particular company but for the (mis)information in a complaint narrative, stating that the company and the consumer that lose business would be disserved. However, the CFPB rationalizes these costs, asserting that “the marketplace of ideas would be able to determine what the data shows.”
Moreover, the CFPB asserts that its proposal to publicly release company responses to narratives mitigates this risk by assuring that, to the extent there are factual disputes, both sides of the dispute will be made public. The CFPB’s press release states that “in most cases, this response would appear at the same time as the consumer’s narrative so that reviewers can see both sides concurrently.” However, the proposal does not discuss the timing of publication of narratives, and it remains unclear exactly when consumer and company narratives would be published. Under its current practice, the CFPB publishes a consumer complaint before it receives a response from the company. If narratives and responses are not published concurrently, potentially factually incorrect information could be in the public domain before a company has an opportunity to respond. Regardless of timing, financial institutions may be hamstrung in defending themselves in this forum given, among other things, obligations to maintain the confidentiality of customer information.
Request for Comments
The CFPB asks stakeholders not to submit comments on the complaint database generally, or current data fields. The CFPB seeks comments in response to the following specific issues:
- The need for any additional information to help inform consumer consent, the precise language to most effectively communicate with the consumer, at what point in the complaint process (at complaint submission or later in the complaint handling process) and where on the Bureau website the information in support of the opt-in consent should be displayed.
- Whether company responses should be distinct and in addition to the response companies send directly to the consumer.
- The standard and methodology for removing customer information, including suggestions of appropriate analogues to the HIPAA identifiers in the consumer financial domain, and any other identifiers which could reasonably be used to identify individuals.