The U.S. Treasury Department recently published a notice in the Federal Register explaining its searchable Consumer Inquiry and Complaint Database ("Database"). The system, which focuses exclusively on financial products and services, initially will be operated by Treasury's Consumer Financial Protection Bureau ("CFPB") Implementation Team and later transferred to the CFPB. The Database is an all-encompassing repository of complaints, potentially available to the public and litigants, made to federal and state agencies regarding financial institutions' products and services. This Alert describes the information to be collected and stored and the circumstances under which it will be accessible. Companies, especially those subject to civil litigation regarding their financial services-related policies and procedures, should carefully consider the full text of the proposal and its impact on their defenses to such lawsuits. Unless a contrary determination is reached by the close of the comment period on February 9, 2011, the Database will then become effective.

Retained Information

The Notice states that Treasury will use the new system to collect, respond to, and refer inquiries and complaints concerning consumer financial products and services. But it also will enable the CFPB to compile aggregate data for its reporting requirements under Dodd-Frank. In short, the Database will serve as a warehouse for complaints received by the CFPB, Federal Trade Commission, and other regulators at the state and federal level.

Yet the Database will be a repository for much more than simply complaints. Treasury has provided a 10-point list of information subject to storage, including:

  1. Correspondence or other information from the complainant or consumer;
  2. Information from the entity or individual referring the inquiry or complaint;
  3. Records of verbal communications by or with the complainant or individual;
  4. Information regarding advocates or others who submit complaints or inquiries on another's behalf;
  5. Information identifying the entity subject to the complaint or inquiry;
  6. Communication with or by the entity subject to the complaint or inquiry;
  7. Unique identifiers, codes, and descriptors categorizing each file;
  8. Information about how complaints were addressed or referred;
  9. Records used to respond to or refer complaints, including information in the CFPB Implementation Team's other record systems; and
  10. Identifiable information regarding both the individual making the inquiry or complaint, and the individual on whose behalf such inquiry or complaint is made.  

Records will be stored in "file folders" and retrievable by select criteria. These include the complaint/inquiry number, the individual's name, or other identifying information.

Scope of Access

The new Database will be accessible to a wide range of government entities. Although the Privacy Act of 1974 strictly limits the exchange of individual information among federal agencies, the Notice provides an expansive list of circumstances under which Treasury will provide information regarding corporations and other business entities and organizations. For example, information may be disclosed to any law enforcement agency conducting a related civil, criminal, or administrative investigation. Professional organizations with relevant jurisdiction also have access, as do prudential regulators and other regulatory authorities. Congressional offices also may receive information upon request of the complainant.

The Notice provides for access to individual complainants and those who submit information on the complainant's behalf, presumably including their attorneys, "to the extent the Treasury deems necessary." Historically, individuals have had only limited access to complaints filed with federal agencies. The Notice explains that, subject to Treasury discretion, access may extend to "[p]ersons determined to be complainants and/or victims." The provision is intended to provide information concerning the progress of a case or investigation, but in providing such information, the CFPB may include investigatory conclusions that hamper a financial institution's defense of a civil claim.

As important, records may be disclosed to a "court … in the course of presenting evidence, including disclosures to opposing counsel or witnesses in the course of civil discovery, litigation, or settlement negotiations." While this paragraph of the Notice is somewhat vague, it can be interpreted to allow for disclosure of records pursuant to a court order (perhaps including a civil subpoena) without limitation as to the particular complainant or litigation at issue. This could result in an adverse party's ability to subpoena allegedly similar prior complaints against a financial services defendant to establish notice, willful behavior for punitive damages, or unwarranted leverage during settlement discussions. It appears the plaintiff's bar also could use such complaint information collected in a single matter as a "fishing expedition" for additional similar matters.

What Companies Can Do Now

Companies subject to repeated civil litigation over their financial products and services should strongly consider submitting a formal comment suggesting a limitation, or at the very least a clarification, of the circumstances under which parties can obtain records of others' complaints. The comment period for this Notice ends on February 9, 2011. Jones Day's multidisciplinary Financial Institutions Litigation & Regulation Practice protects its clients' business interests by assisting in the submission of comments on proposed regulations and notices.